ADOPTED RULES
An agency may take final action on a section 30 days after a proposal has been 
published in the Texas Register. The section becomes effective 20 days after the 
agency files the correct document with the Texas Register, unless a later date 
is specified or unless a federal statute or regulation requires implementation 
of the action on shorter notice.
If an agency adopts the section without any changes to the proposed text, only 
the preamble of the notice and statement of legal authority will be published. 
If an agency adopts the section with changes to the proposed text, the proposal 
will be republished with the changes.

TITLE 4. AGRICULTURE
PART VII. Texas Department of Agriculture
CHAPTER 30. Texas Agriculture Finance Authority: Young Farmer
Loan Guarantee Program
SUBCHAPTER A. General Procedures
4 TAC sec.sec.30.3, 30.7, 30.10
The Board of Directors of the Texas Agricultural Finance Authority (the 
Authority) of the Texas Department of Agriculture (the department) adopts 
amendments to sec.sec.30.3, 30.7, and 30.10, concerning the Young Farmer Loan 
Guarantee Program, without changes to the proposal as published in the August 
23, 1996, issue of the Texas Register (21 TexReg 7933). 
The amendments are made to clarify definitions and related sections and to make 
the sections consistent with statutory requirements. The amendment to sec.30.3 
changes the definition for the term "first farm and ranch operation" to clarify 
that the operation must be the applicant's first independent operation,  and 
changes the definition of the term "plan" to make that definition consistent 
with the enabling statute for the program. The amendment to sec.30.7 deletes the 
requirement of filing a completed personal history questionnaire and changes the 
type of plan required to be filed, to make this section consistent with the 
amendment to the definition of "plan" found in sec.30.3. The  amendment to 
sec.30.10 changes the requirements for filing of financial and cash flow 
statements by the applicant. 
Two comments were received generally in support of the amendments. 
The amendments are adopted under the Texas Agriculture Code (the Code), 
sec.253.007(e), which provides the Board of Directors of the Texas Agricultural 
Finance Authority with the same authority in administering the Young Farmer Loan 
Guarantee Program as it has in administering programs established by the board 
under Chapter 58 of the Code; sec.58.023 of the Code, which provides the board 
with the authority to adopt rules to establish criteria for eligibility of 
applicants and criteria for lenders; sec.58.022 of the Code, which provides the 
board with the authority to adopt rules and procedures for administration of the 
loan guarantee program; and Texas Government Code, sec.2001.004, which requires 
that the Authority adopt rules of practice stating the nature and requirements 
of all available formal and informal procedures. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614232
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Effective date: October 21, 1996
Proposal publication date: August 23, 1996
For further information, please call: (512) 463-7583

TITLE 19. EDUCATION
PART II. Texas Education Agency
CHAPTER 61. School Districts
SUBCHAPTER AA. Commissioner's Rules
County Education Districts
19 TAC sec.61.1001
The Texas Education Agency (TEA) adopts an amendment to sec.61.1001, concerning 
county education districts (CEDs), without changes to the proposed text as 
published in the August 23, 1996, issue of the Texas Register (21TexReg 7934). 
The section establishes definitions, requirements, and procedures related to 
managing the assets, liabilities, and records of former CEDs. 
The amendment specifies the treatment of various revenue sources in determining 
tax efforts for setting limits on the guaranteed yield program described in the 
Texas Education Code, Chapter 42, Subchapter F. The amendment is necessary to 
provide for appropriate recognition of the tax efforts of school districts in 
the transition to the system of school finance brought about by Senate Bill 7, 
73rd Texas Legislature, 1993. 
The amendment provides for the payment of additional grant funds to public 
school districts based on a recognition of tax collections of CEDs in 1992-1993. 
The change reflects the settlement agreement in the lawsuit brought by several 
school districts, styled Stamford Independent School District v. Commissioner of 
Education.
No comments were received regarding adoption of the amendment.
The amendment is adopted under sec.4.15 of Senate Bill 7, 73rd Texas 
Legislature, 1993, which authorizes the commissioner of education to adopt rules 
as necessary to implement statutory requirements concerning abolition of CEDs.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority. 
Issued in Austin, Texas, on September 27, 1996.
TRD-9614165
Criss Cloudt
Associate Commissioner, Policy Planning and Research
Texas Education Agency
Effective date: October 18, 1996
Proposal publication date: August 23, 1996
For further information, please call: (512) 463-9701

CHAPTER 153.School District Personnel
SUBCHAPTER BB.Commissioner's Rules Concerning School District
Staff Development
19 TAC sec.153.1011
The Texas Education Agency (TEA) adopts new sec.153.1011, concerning school 
district staff development with changes to the proposed text as published in the 
August 6, 1996, issue of the Texas Register (21 TexReg 7310). 
The new section provides guidelines for districts concerning minimum staff 
development standards for planning, preparation, and improvement. In addition, 
the new section will impact the campus improvement plan and, ultimately, student 
achievement. 
Senate Bill 1, 74th Texas Legislature, 1995, transferred authority for the 
information contained in this section from the State Board of Education to the 
commissioner of education. New sec.153.1011 is adopted as part of the sunset 
review process mandated by Senate Bill 1. Section 153.1011 replaces 19 TAC 
sec.149.21, General Requirements for Staff Development, which was repealed by 
the State Board of Education. The following changes have been made to new 
sec.153.1011 since the section was published as proposed. 
Under subsection (a), language has been added to emphasize explicitly the role 
the legislature placed on decision-making committees in the area of staff 
development. 
Under subsection (b), language has been revised to clarify recipients of and 
purpose of staff development opportunities. 
Under subsection (c), language has been added to emphasize legislative mandate 
and to ensure that teachers have input in establishing their individual needs. 
Under subsection (d), language has been added to allow districts flexibility in 
the development of staff development models and to clarify the expectations of 
the approved staff development program. 
Under subsection (e), language has been added to emphasize focus on standards of 
professional practices.
Under new subsection (f), formerly subsection (e), language has been added to 
include committees established under the Texas Education Code, sec.11.251, in 
the planning process and to clarify the focus of staff development. 
The following comments have been received regarding adoption of the new section.
Comment. Representatives from the Association of Texas Professional Educators 
and the Texas Statewide Systemic Initiative request that the commissioner of 
education include language in subsection (a) that emphasizes the role the 
legislature placed on decision-making committees in the area of staff 
development. 
Agency Response. The agency agrees with the comment and has added language to 
include the recommendation. 
Comment. Representatives from the Association of Texas Professional Educators 
and Region VI Education Service Center request that the commissioner of 
education include language in subsection (b) that clarifies recipients of and 
purpose of staff development opportunities. 
Agency Response. The agency agrees with the comment and has added language to 
include the recommendation. 
Comment. A representative from the Association of Texas Professional Educators 
requests that the commissioner of education include language in subsection (c) 
that emphasizes legislative mandate for campus and district committees. Agency 
Response. The agency agrees with the comment and has added language to include 
the recommendation. 
Comment. A representative from the Region VI Education Service Center requests 
that the commissioner of education include language in subsection (c) to ensure 
teachers have input. 
Agency Response. The agency agrees with the comment and has added language to 
include the recommendation. 
Comment. A representative from the Texas Classroom Teachers Association requests 
that the commissioner of education add a specific statement of the statutory 
requirement to subsection (c) that states that staff development be developed 
and approved by the campus-level committee established under sec.11.251 of the 
Texas Education Code. 
Agency Response. The agency agrees with the comment and has added language to 
include the recommendation. 
Comment. Members of the Education Service Center Core Group request that the 
commissioner of education include language in subsection (c) that emphasizes 
legislative mandate, provides consistency to references for campus and district 
groups, and establishes the individual needs of teachers and administrators.
Agency Response. The agency agrees with the comment and has added language to 
include the recommendation. 
Comment. A representative of the Texas Statewide Systemic Initiative requests
that the commissioner of education include language in subsection (c) that
ensures that teachers have input in establishing their individual needs.
Agency Response. The agency agrees with the comment and has added language
to include the recommendation. 

Comment. A representative from the Association of Texas Professional Educators
requests that the commissioner of education include language in subsection
(d) that clarifies the expectations of the approved staff development program.
Agency Response. The agency agrees with the comment and has added language
to include the recommendation. 

Comment. Members of the Education Service Center Core Group request that
the commissioner of education include language in subsection (d) that allows
districts flexibility in the development of staff development models. 

Agency Response. The agency agrees with the comment and has added language
to include the recommendation. 

Comment. A question was introduced by a representative of the Texas Statewide
Systemic Initiative. Should a paragraph of descriptions for the practices
listed be added in sec.153.1011(d)? 

Agency Response. The language added in sec.153.1011(e) provides the requested
clarification.

Comment. A representative from the Association of Texas Professional Educators
requests that the commissioner of education include language in subsection
(e) that includes committees established under the Texas Education Code,
sec.11.251, in the planning process. 

Agency Response. The agency agrees with the comment and has added language
in new subsection (f), formerly subsection (e), to include the recommendation.
Comment. A representative of the Texas Statewide Systemic Initiative requests
that the commissioner of education add a new subsection (f) to state that
the staff development program of the district should reflect the standards
of professional practices recognized at the state and national levels. 

Agency Response. The agency agrees with the comment and has added language
in subsection (e) to include the recommendation. 

Comment. A representative of the Texas Statewide Systemic Initiative requests
that the commissioner of education include language in subsection (e) that
clarifies the focus of staff development. 

Agency Response. The agency agrees with the comment and has added language
with minor wording changes in new subsection (f), formerly subsection (e),
to include the recommendation. 

Comment. A question was introduced by a representative of the Texas Statewide
Systemic Initiative. Would professional development be a better term to use
throughout the rule rather than staff development? 

Agency Response. The agency disagrees with this comment. The rule is in
response to the Texas Education Code, sec.21.451, which refers to staff
development requirements. 

The new section is adopted under the Texas Education Code sec.21.451,
which authorizes the commissioner of education to establish minimum staff
development standards by a school district for program planning, preparation,
and improvement. 

sec.153.1011.Minimum Staff Development Standards. 
(a) Each school district shall budget adequate time and financial
resources to support a comprehensive staff development program, as approved
in accordance with the Texas Education Code, sec.11.253(e) and sec.21.451,
that promotes learning, promotes collaborating with colleagues, reflects
best practices, and is guided by the campus improvement plan developed through
the site-based decision making process. 

(b) Each school district shall offer the staff development
opportunities outlined in the Texas Education Code, sec.21.451(b), for
campus and district staff to maintain skills and be thoroughly prepared to
successfully carry out their duties and responsibilities. Each staff development
program must address the areas required in the Texas Education Code, 
sec.21.451(a).
(c) The campus and district committees established under the
Texas Education Code, sec.11.251, must identify staff development needs
for teachers and administrators guided by the strategies and activities of
the district and campus improvement plans and individual growth plans; where
teachers will have input into the identification of those needs and in the
planning of staff development. 

(d) The approved staff development program shall provide access
to various models of staff development that foster and model effective practices
such as: 

(1) individually-guided model; 

(2) observation/assessment model; 

(3) development/improvement process model; 

(4) inquiry model; 

(5) training model; and 

(6) other models meeting local needs. 

(e) The staff development program of the district should reflect
the standards of professional practices recognized at the state and national
levels. 

(f) Each committee and school district shall plan for and promote
student achievement for all students, with the focus of staff development
on standards for student performance in the Texas essential knowledge and
skills (TEKS). 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on October 2, 1996.
TRD-9614393
Criss Cloudt

Associate Commissioner, Policy Planning and Research

Texas Edication Agency

Effective date: October 23, 1996

Proposal publication date: August 6, 1996

For further information, please call: (512) 463-9701

TITLE 22. EXAMINING BOARDS
PART IX. Texas State Board of Medical Examiners
CHAPTER 161.General Provisions
22 TAC sec.161.1
The Texas State Board of Medical Examiners adopts an amendment
to sec.161.1, without change, to the proposed text as published in the
July 5, 1996, issue of the Texas Register
(21 TexReg 6183). 

The section as adopted will enable the Non-Profit Health Organizations
Committee and the Ethics Committee to function as standing committees of
the board. 

The section will function by clarifying the duties and expanding the 
responsibilities
of the two committees. 

No comments were received regarding adoption of the amendment.

The amendment is adopted under the Medical Practice Act, Texas
Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State
Board of Medical Examiners with the authority to make rules, regulations
and bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of
the practice of medicine in this state, and the enforcement of this Act. 
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614264
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Effective date: October 22, 1996

Proposal publication date: July 5, 1996

For further information, please call: (512) 305-7016

CHAPTER 163.Licensure
22 TAC sec.sec.163.1, 163.6, 163.8
The Texas State Board of Medical Examiners adopts amendments
to sec.163.1, 163.6, and 163.8, with changes, to the proposed text as published
in the July 12, 1996, issue of the Texas Register 
(21 TexReg 6407). 

The section as adopted will make the licensure process more efficient,
acknowledge the validity of the National Board of Osteopathic Medical Examiners
examination for purposes of licensure, and promote MD-PhD and DO-PhD programs
so as to result in more qualified licensure applicants. 

The section will function by clarifying what constitutes a passing score
on the COMLEX Level III of the National Board of Osteopathic Medical Examiners
examination. The amendment to the rule will also clarify the criteria to
be evaluated when considering licensure of graduates of simultaneous MD-PhD
or DO-PhD programs. 

Comments were received in support of the proposed amendments from the Texas
Osteopathic Medical Association and the American Osteopathic Association
with suggested nonsubstantive changes which would clarify passing scores
on the COMLEX Level III of the National Board of Osteopathic Medical Examiners
examination. The changes have been incorporated into the text. 

The amendments are adopted under the Medical Practice Act, Texas
Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State
Board of Medical Examiners with the authority to make rules, regulations
and bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of
the practice of medicine in this state, and the enforcement of this Act. 
sec.163.1.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the contents clearly indicate otherwise.

Examinations administered by the board for licensure by examination 
-To be eligible for licensure by examination an applicant must sit
for the required examination administered by the board and pass. A passing
score is 75 or better on the USMLE and the Texas medical jurisprudence 
examinations.
A passing score is 75 or better on COMLEX Level III of the NBOME examination
or its successor. All steps or components must be passed within seven years.
The board shall administer Step 3 of the United States Medical Licensing
Examination  (USMLE); COMLEX Level III of the National Board of Osteopathic
Medical Examiners  (NBOME) examination or its successor after September 1,
1997; and the Texas medical jurisprudence examination in writing at times
and places as designated by the board.

sec.163.6.Procedural Rules for Licensure Applicants. 
(a) Applicants for licensure: 

(1)-(7) (No Change.) 

(8) must have the application for licensure complete in
every detail 20 days prior to the board meeting in which they are considered
for licensure. Applicants may qualify for a Temporary License prior to being
considered by the board for licensure, as required by sec.163.9 of this
title (relating to Temporary Licensure-Regular); 

(9)-(12) (No change.) 

(13) must pass, within seven years all parts of all examinations
required for licensure. The board may consider for licensure graduates of
simultaneous MD-PhD or DO-PhD programs who have passed all parts of their
required examinations no later than two years after their MD or DO degree
was awarded. 

(b) (No change.) 

(c) Applicants for licensure by endorsement: 

(1) (No change.) 

(2) who have not been examined for licensure in a ten-year
period prior to the filing date of the application must pass Day III or 
Component
II of the FLEX prior to June 1988, or SPEX, with a grade of 75 or higher,
unless the applicant has obtained: 

(A) -(B) (No change.) 

sec.163.8.Administration of Examinations. 
(a) The board shall administer Step 3 of the United States
Medical Licensing Examination (USMLE); COMLEX Level III of the National
Board of Osteopathic Medical Examiners (NBOME) examination or its successor
after September 1, 1997 and the Texas medical jurisprudence examination in
writing, at times and places as designated by the board. 

(b)-(d) (No change.) 

(e) All NBOME COMLEX Level III questions and answers, with
grades attached, shall be preserved for at least one year at the National
Board of Osteopathic Medical Examiners offices. 

(f) An applicant shall not be eligible to sit for the Texas
medical jurisprudence examination until the application is complete and until
the applicant has made a personal appearance to have his or her required
original documents inspected by a representative of the board. 

(g) an applicant shall not be eligible to sit for the USMLE
Step 3 examination until: 

(1) the application is complete; 

(2) the applicant has passed: 

(A) the USMLE Step 1 and USMLE Step 2 examinations with a
grade of 75 or better on each step within three attempts; or 

(B) FLEX Component I with a grade of 75 or better within three
attempts; or 

(C) the 1991 NSBME Comprehensive I and USMLE Step 2 examinations
with a grade of 75 or better on each step and part within three attempts;
and 

(3) the applicant has made a personal appearance
to have his or her required original documents inspected by a representative
of the board. 

(h) an applicant shall not be eligible to sit for the NBOME
COMLEX Level III examination until: 

(1) the application is complete; 

(2) the applicant has passed the NBOME Part I and NBOME
Part II examinations with a passing grade of 75 or better on each part within
three attempts; and 

(3) the applicant has made a personal appearance to have
his or her required original documents inspected by a representative of the
board. 

This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.

Issued in Austin, Texas, on September 30, 1996.
TRD-9614265
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Effective date: October 22, 1996

Proposal publication date: July 5, 1996

For further information, please call: (512) 305-7016

CHAPTER 177.Certification of Non-Profit Organizations
22 TAC sec.sec.177.9-177.15
The Texas State Board of Medical Examiners adopts repeals
to sec.sec.177.9-177.15, without changes, to the proposed text as published
in the July 5, 1996, issue of the Texas Register 
(21 TexReg 6184). 

The repeals as adopted will allow for extensive revisions and rewrite.
The repeals will function by reorganization of the sections for clarification.
No comments were received regarding adoption of the repeals. 

The repeals are adopted under the Medical Practice Act, Texas
Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State
Board of Medical Examiners with the authority to make rules, regulations
and bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of
the practice of medicine in this state, and the enforcement of this Act. 
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614266
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Effective date: October 22, 1996

Proposal publication date: July 5, 1996

For further information, please call: (512) 305-7016


The Texas State Board of Medical Examiners
adopts new sec.177.9-177.15, without changes, to the proposed text as published
in the July 5, 1996, issue of the Texas Register 
(21 TexReg 6184). 

The sections as adopted will clarify and expand the requirements for approval
of certification of non-profit health organizations under the Medical Practice
Act, sec.5.01(b). Extensive reorganization of the sections will also help
in clarifying requirements for certification under different sections of
the Medical Practice Act. 

The sections as adopted will more clearly define the procedure for the
approval for certification of migrant, community, or homeless health centers
organized and operated under the authority of and in compliance with 42 U.S.C.
sec.sec.254b, 254c, or 256, or federally qualified health centers under
42 U.S.C. sec.sec.1396d(1)(2)(B), who are non-profit corporations under
the Texas Non-Profit Corporation Act, Article 1396-1.01, Vernon's Texas Civil
Statutes, and the Internal Revenue Code, section 501(c)(3). 

No comments were received regarding adoption of the new sections.

The new sections are adopted under the Medical Practice Act,
Texas Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas
State Board of Medical Examiners with the authority to make rules, regulations
and bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of
the practice of medicine in this state, and the enforcement of this Act. 
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614267
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Effective date: October 22, 1996

Proposal publication date: July 5, 1996

For further information, please call: (512) 305-7016

CHAPTER 183.Acupuncture
22 TAC sec.sec.183.2-183.4, 183.14
The Texas State Board of Medical Examiners adopts amendments
to sec.sec.183.2-183.4 and 183.14, without changes, to the proposed text
as published in the July 5, 1996, issue of the 
Texas Register (21 TexReg 6186). Due to an error in the original publication,
the entire text is being republished for clarification. 

The sections as adopted will better inform the public where they can make
a complaint regarding licensed acupuncturists and clarify various requirements
for licensure. 

The sections as adopted will function by properly defining a school of
acupuncture which is substantially equivalent to a Texas acupuncture school,
revising the committee structure to have one licensure committee, further
defining the requirements regarding English competency, amending the required
number of undergraduate hours, and revising the complaint procedure notification
to reflect the board's new address. 

No comments were received regarding adoption of these amendments. 

The amendments are adopted under the Medical Practice Act, Texas
Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State
Board of Medical Examiners with the authority to make rules, regulations
and bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of
the practice of medicine in this state, and the enforcement of this Act. 
sec.183.2.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the content clearly indicates otherwise.

Substantially equivalent to a Texas acupuncture school-A school
or college of acupuncture located outside the United States or Canada must
be an institution of higher learning designed to select and educate acupuncture
students; provide students with the opportunity to acquire a sound basic
acupuncture education through training; to develop programs of acupuncture
education to produce practitioners, teachers, and researchers; and to afford
opportunity for postgraduate and continuing medical education. The school
must provide resources, including faculty and facilities, sufficient to support
a curriculum offered in an intellectual and practical environment that enables
the program to meet these standards. The faculty of the school shall actively
contribute to the development and transmission of new knowledge. The school
of acupuncture shall contribute to the advancement of knowledge and to the
intellectual growth of its students and faculty through scholarly activity,
including research. The school of acupuncture shall include, but not be limited
to, the following characteristics:

(A)-(C) (No changes.) 

(D) the curriculum shall be of at least 1800 hours in
duration.

sec.183.3. Meetings. 
(a)-(f) (No change.) 

(g) The following are standing and permanent committees of
the acupuncture board. The responsibilities and authority of these committees
shall include those duties and powers as set forth below and such other 
responsibilities
and authority which the acupuncture board may from time to time delegate
to these committees. 

(1) Licensure Committee: 

(A) draft and review proposed rules regarding licensure by
reciprocal endorsement, and make recommendations to the acupuncture board
regarding changes or implementation of such rules; 

(B) draft and review proposed application forms for licensure
by endorsement, and make recommendations to the acupuncture board regarding
changes or implementation of such rules; 

(C) oversee the application process for licensure by endorsement;
(D) receive and review applications for licensure by endorsement
in the event the eligibility for licensure of an applicant is in question;
(E) present the results of reviews of applications for licensure
by endorsement and make recommendations to the acupuncture board regarding
licensure of applicants whose eligibility is in question; 

(F) draft and review proposed rules regarding licensure by
examination, and make recommendations to the acupuncture board regarding
changes or implementation of such rules; 

(G) draft and review proposed rules pertaining to the overall
licensure process, and make recommendations to the acupuncture board regarding
changes or implementation of such rules; 

(H) oversee and make recommendations to the acupuncture board
regarding any aspect of the examination process including the approval of
an appropriate licensure examination and the administration of such an 
examination;
(I) draft and review proposed rules regarding any aspect of
the examination; 

(J) receive and review applications for licensure by examination
in the event the eligibility for licensure of an applicant is in question;
(K) present the results of reviews of applications for licensure
by examination, and make recommendations to the acupuncture board regarding
licensure of applicants whose eligibility is in question; and 

(L) make recommendations to the acupuncture board regarding
matters brought to the attention of the Licensure Committee. 

(2) Discipline and Ethics Committee: 

(A) draft and review proposed rules regarding the discipline
of acupuncturists and enforcement of Subchapter F of the Act; 

(B) oversee the disciplinary process and give guidance to
the acupuncture board and staff regarding methods to improve the disciplinary
process and more effectively enforce Subchapter F of the Act; 

(C) monitor the effectiveness, appropriateness, and timeliness
of the disciplinary process; 

(D) make recommendations regarding resolution and disposition
of specific cases and approve, adopt, modify, or reject recommendations from
staff or representatives of the acupuncture board regarding actions to be
taken on pending cases. Approve dismissals of complaints and closure of 
investigations;
(E) draft and review proposed ethics guidelines and rules
for the practice of acupuncture, and make recommendations to the acupuncture
board regarding the adoption of such ethics guidelines and rules; 

(F) make recommendations to the acupuncture board and staff
regarding policies, priorities, budget, and any other matters related to
the disciplinary process and enforcement of Subchapter F of the Act; and 
(G) make recommendations to the acupuncture board regarding
matters brought to the attention of the Discipline and Ethics Committee.
(3) Education Committee: 

(A) draft and propose rules regarding educational requirements
for licensure in Texas and make recommendations to the acupuncture board
regarding changes or implementation of such rules; 

(B) draft and propose rules regarding training required for
licensure in Texas and make recommendations to the acupuncture board regarding
changes or implementation of such rules; 

(C) draft and propose rules regarding tutorial program requirements
for licensure in Texas and make recommendations to the acupuncture board
regarding changes or implementation of such rules; 

(D) draft and propose rules regarding continuing education
requirements for renewal of a Texas license and make recommendations to the
acupuncture board regarding changes or implementation of such rules; 

(E) draft and propose rules regarding educational requirements
for degrees granted upon graduation in Texas and make recommendations to
the acupuncture board regarding changes or implementation of such rules; 
(F) consult with the Texas Higher Education Coordinating Board
regarding educational requirements for schools of acupuncture, oversight
responsibilities of each entity, degrees which may be offered by schools
of acupuncture; 

(G) maintain communication with acupuncture schools; 

(H) plan and make visits to acupuncture schools at specified
intervals, with the goal of promoting opportunities to meet with the students
so they may become aware of the board and its functions; 

(I) develop information regarding foreign acupuncture schools
in the areas of curriculum, faculty, facilities, academic resources, and
performance of graduates; 

(J) draft and propose rules which would set the requirements
for degree programs in acupuncture; 

(K) be available for assistance with problems relating to
acupuncture school issues which may arise within the purview of the board;
(L) offer assistance to the Examination and Endorsement Committees
in determining eligibility of graduates of foreign acupuncture schools for
licensure by endorsement or examination; 

(M) study and make recommendations regarding documentation
and verification of records from foreign acupuncture schools; 

(N) make recommendations to the acupuncture board regarding
matters brought to the attention of the Education Committee. 

(h)-(m) (No changes.)

sec.183.4.Licensure.
(a) Licensure by examination from an acceptable, approved school
of acupuncture. An applicant must present satisfactory proof to the acupuncture
board that the applicant: 

(1)-(4) (No changes.) 

(5) has taken and passed, within three attempts, the full
NCCA examination; and 

(6) (No changes.) 

(7) is able to communicate in English. This may be demonstrated
by passage of: 

(A) the NCCA examination taken in English; or 

(B) TOEFL (Test of English as a Foreign Language) with a score
of 550 or more; or 

(C) TSE (Test of Spoken English) with a score of 220 or more;
or 

(D) TOEIC (Test of English for International Communication);
or 

(E) at the discretion of the acupuncture board, any other
similar, validated exam testing English competency given by a testing service
with results reported directly to the acupuncture board. 

(b) Licensure by examination from an acceptable, unapproved
school of acupuncture. An applicant must present satisfactory proof to the
acupuncture board that the applicant: 

(1)-(4) (No changes.) 

(5) has taken and passed, within three attempts, the full
NCCA examination; and 

(6) (No changes.) 

(7) is able to communicate in English. This may be demonstrated
by passage of: 

(A) the NCCA examination taken in English; or 

(B) TOEFL (Test of English as a Foreign Language) with a score
of 550 or more; or 

(C) TSE (Test of Spoken English) with a score of 220 or more;
or 

(D) TOEIC (Test of English for International Communication);
or 

(E) at the discretion of the acupuncture board, any other
similar, validated exam testing English competency given by a testing service
with results reported directly to the acupuncture board. 

(c) Licensure by endorsement for graduates of acceptable approved
and unapproved schools of acupuncture. An applicant, to be eligible for 
licensure
by endorsement, must present satisfactory proof to the acupuncture board
that the applicant: 

(1)-(4) (No changes.) 

(5) has taken and passed, within three attempts, the full
NCCA examination; 

(6) is able to communicate in English. This may be demonstrated
by passage of: 

(A) the NCCA examination taken in English; or 

(B) TOEFL (Test of English as a Foreign Language) with a score
of 550 or more; or 

(C) TSE (Test of Spoken English) with a score of 220 or more;
or 

(D) TOEIC (Test of English for International Communication);
or 

(E) at the discretion of the acupuncture board, any other
similar, validated exam testing English competency given by a testing service
with results reported directly to the acupuncture board; 

(7) has taken and passed the CCAOM CNT course and
practical examination; and 

(8) holds a license in another state or province, that
is substantially equivalent to licensure in Texas; 

(9) is endorsed by another state or province on a form
provided by this state. The endorsement must state that the applicant's license
is current and in full force and has not been restricted, canceled, revoked,
or suspended. 

(d) Licensure by endorsement for graduates of unapproved foreign
acupuncture schools. An applicant, to be eligible for licensure by endorsement,
must present satisfactory proof to the acupuncture board that the applicant:
(1) is at least 21 years of age; 

(2) is of good professional character as defined in sec.
183.2 of this title (relating to Definitions); 

(3) has successfully completed 60 semester hours of general
academic college level courses, other than in acupuncture school, that are
not remedial and would be acceptable at the time they were completed for
credit on an academic degree at a two or four year institution of higher
education within the United States accredited by an agency recognized by
the Higher Education Coordinating Board or its equivalent in other states
as a regional accrediting body. Substantially equivalent coursework completed
as a part of a degree program in Oriental medicine granted by a school located
outside the United States may be accepted by the board on a case-by-case
evaluation; 

(4) is a graduate of a school whose curriculum meets the
requirements for an acceptable unapproved school as determined by a committee
of experts selected by the Texas State Board of Acupuncture Examiners, subject
to approval by the Texas State Board of Medical Examiners; 

(5) is a graduate of an acceptable unapproved acupuncture
school that is substantially equivalent to a Texas school of acupuncture;
(6) has taken and passed, within three attempts, the full
NCCA examination; 

(7) holds a license in another state or province, that
is substantially equivalent to licensure in Texas; 

(8) is endorsed by another state or province, on a form
provided by this state. The endorsement must state that the acupuncturist's
license is current and in full force and has not been restricted, canceled,
revoked, or suspended; 

(9) is eligible for legal practice and/or licensure in
the country of graduation; 

(10) is able to communicate in English. This may be demonstrated
by passage of: 

(A) the NCCA examination taken in English; or 

(B) TOEFL (Test of English as a Foreign Language) with a score
of 550 or more; or 

(C) TSE (Test of Spoken English) with a score of 220 or more;
or 

(D) TOEIC (Test of English for International Communication);
or 

(E) at the discretion of the acupuncture board, any other
similar, validated exam testing English competency given by a testing service
with results reported directly to the acupuncture board; 

(11) has supplied all additional information that
the board may require concerning the applicant's school of acupuncture. 
(e) (No changes.) 

(f) Licensure Documentation. 

(1) (No changes.) 

(2) Documentation required of all applicants for licensure.
(A)-(F) (No changes.) 

(G) Preacupuncture School Transcript. Each applicant must
submit a copy of the record of their undergraduate education. Transcripts
must show courses taken and grades obtained. If determined that the 
documentation
submitted by the applicant is not sufficient to show proof of the completion
of 60 semester hours of college courses other than in acupuncture school,
which courses would be acceptable, at the time of completion, to The University
of Texas at Austin for credit on a bachelor of arts degree or a bachelor
of science degree, the applicant may be requested to contact the Office of
Admissions at The University of Texas at Austin for course work verification. 
(H)-(J) (No changes.) 

(3)-(6) (No changes.)

sec.183.14.Complaint Procedure Notification.
(a) (No changes.) 

(b) Approved English Notification Statement. The following
notification statement in English is approved by the acupuncture board for
purposes of these rules and the Act, sec. 2.09(s)(2), and is a sample of
the type print reference in subsection (a) of this section.

(See Figure: 22 TAC sec. 183.14(b))

(c) Approved Spanish Notification Statement. The following
notification statement in Spanish is approved by the acupuncture board for
purposes of these rules and the Act, sec.2.09(s)(2), and is a sample of
the type print reference in subsection (a) of this section.

Figure 2: 22 TAC sec.183.14(c))

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614268
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Effective date: October 22, 1996

Proposal publication date: July 5, 1996

For further information, please call: (512) 305-7016

CHAPTER 185.Physician Assistants
22 TAC sec.185.6, sec.185.22
The Texas State Board of Medical Examiners adopts amendments
to sec.185.6 and sec.185.22, without changes, to the proposed text as
published in the July 5, 1996, issue of the Texas
Register (21 TexReg 6189).

The section as adopted will allow physician assistants to have ample opportunity
to complete the requirements for continuing medical education with no disruption
of medical services to the citizens of Texas. The section will also update
the board's new address on the complaint procedure notification. 

The section will function by clarifying the board's new address for the
purpose of filing complaints regarding physician assistants and outlining
the guidelines for completion of continuing medical education requirements.
No comments were received regarding adoption of the amendments.

The amendments are adopted under the Medical Practice Act, Texas
Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State
Board of Medical Examiners with the authority to make rules, regulations
and bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of
the practice of medicine in this state, and the enforcement of this Act,
and the Physician Assistant Licensing Act, Texas Civil Statutes, Article
4495b-1, sec.23 which authorizes the Texas State Board of Physician Assistant
Examiners to adopt reasonable and necessary rules for the performance of
its duties. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614269
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Effective date: October 22, 1996

Proposal publication date: July 5, 1996

For further information, please call: (512) 305-7016

CHAPTER 187.Procedure
SUBCHAPTER A.General Provisions
22 TAC sec.187.12
The Texas State Board of Medical Examiners adopts an amendment
to sec.187.12, without changes, to the proposed text as published in the
July 5, 1996, issue of the Texas Register
(21 TexReg 6190). 

The section as adopted will ensure that proper and adequate notification
is given regarding nonrulemaking proceedings. 

The section will function by outlining the procedure for giving notification
in nonrulemaking proceedings. 

No comments were received regarding adoption of the amendment. 

The amendment is adopted under the Medical Practice Act, Texas
Civil Statutes, Article 4495b, sec.2.09(a), which provide the Texas State
Board of Medical Examiners with the authority to make rules, regulations
and bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of
the practice of medicine in this state, and the enforcement of this Act. 
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614270
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Effective date: October 22, 1996

Proposal publication date: July 5, 1996

For further information, please call: (512) 305-7016

PART XV. Texas State Board of Pharmacy
CHAPTER 283. Licensing Requirements for Pharmacists 
22 TAC sec.283.10
The Texas State Board of Pharmacy adopts an amendment to
sec.283.10, concerning rules governing penalties against a license, without
changes to the proposed text published in the April 16, 1996, issue of the 
Texas Register. This amendment clarifies that a
person who has not practiced pharmacy within the last two years in another
state and whose Texas pharmacist license has expired for more than ten years
must apply for licensure by examination and complete a 1,500 hour board-approved
internship program. 

No comments were received regarding adoption of the amendment. 

The amendment is adopted under the Texas Pharmacy Act (Article
4542a-1, Texas Civil Statutes) Section 24 (f), License Renewal, which states
that a person may not renew a pharmacist license, if the license has been
expired for one year or more. This section allows the Board to set the education
and practice conditions whereby an applicant may apply for a new license.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 27, 1996.
TRD-9614170
Fred S. Brinkley, Jr., R.Ph., M.B.A.

Executive Director/Secretary

Texas State Board of Pharmacy

Effective date: October 18,1996

Proposal publication date: April 16, 1996

For further information, please call: (512) 305-8027

TITLE 25. HEALTH SERVICES
PART I. Texas Department of Health
CHAPTER 157. Emergency Medical Care
25 TAC sec.157.25
(Editor's note: The following section submitted by the Texas Department
of Health on September 25, 1996, was inadvertently omitted from the October
4, 1996, issue of the Texas Register. This section contained figures which
were published in the October 4, 1996 issue. However, for clarification,
the figures are being re-published in this issue in the tables and graphics
section. The effective of this new rule is October 16, 1996.)

The Texas Department of Health (department) adopts
new sec.157.25, concerning Out-of-Hospital Do Not Resuscitate (DNR) Order,
with changes to the proposed text as published in the July 16, 1996, issue
of the Texas Register (21TexReg 6557). 
This section implements Health and Safety Code, Chapter 674 which requires
the department to establish a formal procedure for physicians working with
a terminal patient to follow if the patient does not want resuscitation attempts
made in the event of their death. 

This section establishes a "Do Not Resuscitate" process that standardizes
protocols and procedures for physicians, and out-of-hospital healthcare 
professionals
to follow when a terminally ill person requests that no resuscitation efforts
be initiated in the event of their death. This section establishes specific
procedures that are to be withheld. A form has been established which will
serve as the physician's DNR order when appropriately completed. Specifications
have been established for a bracelet and necklace which may be used as 
identification
devices. A process for recordkeeping is outlined. 

The following comments were received concerning the proposed new section.
COMMENT: Concerning sec.157.25, a commenter suggested that a subsection
be added to specify that designated procedures as listed in subsection (c)(1)
cannot be withheld from a person known to be pregnant. The commenter also
asks that the DNR order form in speaking to pregnant persons, replace CPR
with the words "life sustaining treatment". 

RESPONSE: The department agrees with the comment and has added subsection
(g) to address the pregnancy issue; and has changed the wording on the DNR
order form to read "above designated procedures" instead of "CPR". 

COMMENT: Concerning sec.157.25(b), a commenter expressed concern with
the last sentence of paragraph (b), mentioning that it could be misconstrued
to mean that an individual does not have the right to refuse water or nutrition.
RESPONSE: The sentence in question has been removed from the rule. 

COMMENT: Concerning sec.157.25(c)(2), one commenter suggested that a
wallet card be used as a third identification device, and that the presence
of one of the three identification devices be mandated in addition to the
DNR order. 

RESPONSE: The department disagrees. The process was established with the
intent to maintain simplicity. An identification device was included that
would provide immediate recognition of the DNR patient, since the DNR order
may not be as readily available. A wallet card would be no more quickly 
available
than the DNR order. 

COMMENT: Concerning sec.157.25(d)(2), a commenter suggested changing
the wording to say that the DNR order stay with the patient until death;
because if a patient is admitted to the hospital, the DNR order would become
part of the medical record and can get lost and not go with the patient at
the point of discharge. 

RESPONSE: The department disagrees, because subsections (d)(2) and (3)
adequately define retention of the DNR order. The example given could be
solved more appropriately with an education program. 

COMMENT: Concerning sec.157.25(d)(4), one commenter asked that the annual
reporting form be kept very simple in order to conserve limited healthcare
dollars. 

RESPONSE: The department agrees. That is the intent. 

COMMENT: Concerning sec.157.25(e), a commenter would like this subsection
deleted stating that it would be too much responsibility for the field medic.
RESPONSE: The department disagrees. Persons living in other states should
not be penalized for coming to Texas by not allowing them equivalent health
options. This subsection does restrict available DNR identification options
for persons from out of state, in that medics are not allowed to accept any
form of identification other than the written DNR order. Additionally, Section
674.024 of Chapter 674, validates the acceptance of out-of-state DNR orders.
COMMENT: Concerning sec.157.25(h), one commenter asked that nursing homes
be added to the list of distribution points for the DNR order form. 

RESPONSE: The department agrees and has added nursing homes and hospices
to the list. 

COMMENT: Concerning sec.157.25, one commenter questioned whether or not
a subsection should be added to formally accept the department approved 
identification
device. 

RESPONSE: The department agrees and has added subsection (i) detailing
specifications for the identification devices has been added. 

COMMENT: Concerning the DNR order form, one commenter is concerned that
those who have to sign the form are required to sign twice. 

RESPONSE: The department disagrees with changing the signature lines since
they are legislatively mandated. 

COMMENT: Concerning the DNR order form, a commenter stated that the instructions
on the form should be made more specific. One comment suggested a change
in wording for the phrase "...instructing Emergency Medical personnel and
other healthcare professionals to forego resuscitation attempts". The commenter
wants to add the word "certain", so the phrase would read "forego certain
resuscitation attempts". Secondly, rather that saying "Measures not to be
initiated..." the commenter suggests a change in wording to "The only measures
not...". Thirdly he suggests deleting the words "emergency care including
comfort" and adding the word "any" before the word "other". The sentence
would then read,"This order does not effect the provision of any other care.
And finally, the commenter wanted to add a sentence which would read,"For
example, this order does not effect the provision of water or nutrition and
care designed to provide comfort or to alleviate pain." 

RESPONSE: The department disagrees with these suggested wording changes.
The instructions on the DNR order form are adequate and define the intent
of the rule. Resuscitation measures are emergency measures. The DNR order
does not become an issue, until the patient has lost life signs. The DNR
order form addresses what actions will or will not be taken in the event
of death; rather than the care of a dying patient. The section and the order
form clearly define which measures will be withheld. The form already states
that the order does not affect the provision of other emergency care to include
comfort care. Subsection (b) speaks to comfort measures and specifically
mentions not withholding water and nutrition which is consistent with the
definition of life sustaining measures in Chapter 674. 

COMMENT: Concerning sec.157.25, 18 commenters were concerned that only
CPR can be done to resuscitate a pregnant person who has a DNR order. 

RESPONSE: The department disagrees for the same reasons given in the previous
response. However, clarifying language has been added to allay concerns.
COMMENT: Concerning the DNR order form, one commenter said that the wording
changes suggested for the purpose section of the form would make the form
too difficult to understand and confusing to the patient, their families
and emergency personnel. The commenter stated that her association supports
the form as it stands. 

RESPONSE: The department agrees for reasons already stated. 

The following organizations, associations, or providers commented on the
rule: Greater Austin Right to Life; Texas Chapter of Emergency Physicians;
Texas Medical Association; Texas Hospital Association; Texas Association
for Home Care; Texas Hospice Organization; Arlington Fire Department; Austin
EMS and Travis County EMS. The commenters were generally in favor of the
rules as proposed, but offered recommendations for change. 

The new section is adopted under the Health and Safety Code,
Chapter 773, which provides the Board of Health with the authority to adopt
rules to implement the Emergency Medical Services Act; and sec.12.001,
which provides the Texas Board of Health with the authority to adopt rules
for the performance of every duty imposed by law on the Texas Board of Health,
the Texas Department of Health, and the Commissioner of Health

sec.157.25. Out-of-Hospital Do Not Resuscitate (DNR)
Order.
(a) Purpose. The purpose of this section shall be to establish
a statewide DNR protocol as required in the Health & Safety Code, Title
8, Chapter 674. 

(b) DNR order. A DNR order may be issued by an attending physician
for a patient who has been diagnosed as having a terminal condition. That
attending physician has responsibility for ensuring that the form is filled
out in its entirety and that the information regarding the existence of a
DNR order is entered into the patient's medical record. 

(c) Protocol development. A DNR protocol in accordance with
this section, shall apply to all out-of-hospital settings including cardiac
arrests which occur during interfacility transport. The protocol shall include
the following: 

(1) a copy of the Texas Department of Health (department) standardized
DNR form listing the designated procedures that shall be withdrawn or withheld.
Those procedures shall be: 

(A) cardiopulmonary resuscitation; 

(B) endotracheal intubation or other advanced airway management;
(C) artificial ventilation; 

(D) defibrillation; 

(E) transcutaneous cardiac pacing; and 

(F) administration of cardiac resuscitation medications; 
(2) an explanation of the patient identification
process to include an option to use a department-standardized identification
device such as a necklace or bracelet; and 

(3) an on-site DNR dispute resolution process which includes
contacting an appropriate physician. 

(d) Recordkeeping. Records shall be maintained on each incident
in which an out-of-hospital DNR order or DNR identification device is 
encountered
by responding healthcare professionals, and the number of cases where there
is an on-site revocation of the DNR order shall be recorded. 

(1) The data documented should include: 

(A) an assessment of patient's physical condition; 

(B) whether an identification device or a DNR form was used
to confirm DNR status and patient identification number; 

(C) any problems relating to the implementation of the DNR
order; 

(D) the name of the patient's attending physician; and 

(E) the full name, address, telephone number, and relationship
to patient of any witness used to identify the patient. 

(2) If the patient is transported, the original DNR
order shall be kept with the patient. 

(3) Copies of the original DNR order may be put on file
with concerned parties, and the original order shall remain in the possession
of the patient, a legal guardian, or the healthcare facility responsible
for the patient's care. The original DNR order shall be filed as a part of
the permanent patient care record at the facility where the patient dies.
(4) Annually, the out-of-hospital provider shall submit
a report to the Bureau of Emergency Management with the following information:
(A) number of times personnel have been presented with DNR
documentation; 

(B) number of times there was a problem and the DNR order
could not be honored; and 

(C) any problems that were encountered using the standardized
form. 

(e) Out-of-State DNR Orders. Personnel may accept an out-of-hospital
DNR order that has been executed in any other state, if there is no reason
to question the authenticity of the order. Personnel may not accept any out-of-
state
identifying devices to include bracelets or necklaces. If there is any question
of validity of the DNR order, the responding healthcare professional shall
attempt to contact medical control. 

(f) Failure to honor a DNR order. If there are any indications
of unnatural or suspicious circumstances, the provider shall begin resuscitation
efforts until such time as a physician directs otherwise. 

(g) Pregnant persons. A person may not withhold the designated
procedures listed in section (c)(1) from a person known by responding healthcare
professionals to be pregnant. 

(h) DNR Form. The Bureau of Emergency Management or their appointees
shall furnish DNR forms to physicians, clinics, hospitals, nursing homes,
hospices and home health agencies throughout the state upon request; 

(1) The form shall contain all the information as prescribed
in the Health and Safety Code, Chapter 674; 

(2) The form shall be 8 1/2 inches by 14 inches, printed
front and back, and in the format specified by the board as follows:  

Figure 1: 25 TAC, sec.157.25(g)(2)

(i) Identification devices. A vendor under contract with the
Texas Department of Health shall make the identification bracelet and necklace
according to the following specifications: 

(1) The bracelet shall be made of stainless steel in 8" length
with an engravable section which is 1 5/8" long, 5/8" wide and 1/32" thick,
with an easy opening attachment clasp. The statewide standardized DNR logo
will be on the front in red, white, and black colors as specified; 

(2) The necklace shall be made of stainless steel 1" in
diameter and 1/32" thick. There will be a 16"-18" stainless steel chain 
permanently
attached without a clasp. The statewide standardized DNR logo will be on
the front in red, white, and black colors as specified. 

This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.

Issued in Austin, Texas, on September 25, 1996.
TRD-9614047
Susan K. Steeg

General Counsel

Texas Department of Health

Effective date: October 16, 1995

Proposal publication date: July 16, 1996

For further information, please call: (512) 458-7236

TITLE 28. INSURANCE
PART I. Texas Department of Insurance
CHAPTER 5. Property and Casualty
SUBCHAPTER D. Fired and Allied Lines Insurance
Underserved Areas for Residential Property Insurance
28 TAC sec.5.3700
(Editor's note: The following section submitted by the Texas Department
of Insurance on September 24, 1996, was inadvertently omitted from the October
4, 1996, issue of the Texas Register. This section contained figures which
were published in the October 4, 1996 issue. However, for clarification,
the figures are being re-published in this issue in the tables and graphics
section. The effective of this new rule is October 15, 1996.)

The Commissioner of Insurance adopts new section
sec.5.3700, concerning the designation of geographic areas as underserved
for residential property insurance for purposes of the Insurance Code, Articles
5.35-3 and 21.49-12, with changes to the proposed text as published in the
August 6, 1996, issue of the Texas Register
(21 TexReg 7337). The new section was considered by the Commissioner of 
Insurance
in a public hearing on September 5, 1996, Docket Number 2248. 

The new section is necessary to designate the areas determined by the 
Commissioner
of Insurance (Commissioner) to be underserved areas for purposes of the Property
Protection Program in Article 5.35-3 and the areas determined to be underserved
for purposes of the Market Assistance Program in Article 21.49-12. Both statutes
specifically contemplate geographic designations will be made by the 
Commissioner.
The new section identifies the factors considered by the Commissioner in
determining these areas to be underserved. Article 5.35-3, sec.1(a) (Acts
1995, 74th Legislature, chapter 415, sec.3, effective August 28, 1995)
provides that in determining which areas will be designated as underserved,
the Commissioner shall consider whether residential property insurance is
not reasonably available to a substantial number of owners of insurable property
in the underserved area and any other relevant factors as determined by the
Commissioner. Upon the determination of such areas, all insurers authorized
to write property or casualty insurance in this state and writing residential
property insurance in this state, including those insurers licensed under
Chapters 18 and 19 of the Insurance Code, are authorized to write insurance
in these areas on the forms promulgated pursuant to Article 5.35-3 
(Commissioner's
Order Number 95-1285, December 8, 1995). Article 21.49-12 (Acts 1995, 74th
Legislature, page 3008, chapter 415 sec.5, effective August 28, 1995) requires
the Commissioner to establish a voluntary market assistance program (MAP)
to assist consumers in obtaining residential property insurance coverage
in underserved areas that are to be determined and designated by the 
Commissioner
by rule using the standards specified in Article 5.35-3, sec.1. Upon the
determination of such areas, the Texas Department of Insurance (Department)
will operate the MAP, pursuant to the MAP plan of operation, to provide 
assistance
to consumers residing in the designated underserved areas in obtaining 
residential
property insurance from voluntarily participating insurers in the admitted
market. The notice of the adoption of the MAP plan of operation 
(sec.sec.5.10001-5.10015
of this title) was published in the September 10, 1996, issue of the 
Texas Register (21 TexReg 8715). 

The section will function to fulfill the Commissioner's statutory 
responsibilities
to develop the Property Protection Program (PPP), pursuant to Article 5.35-3,
and the Market Assistance Program (MAP), pursuant to Article 21.49-12, which
improve availability of residential property insurance to owners of insurable
property. The PPP will enable residents of the most severely underserved
areas, Class 1, to obtain coverage under new policy forms which were designed
to encourage insurers to provide coverage to structures not previously eligible
for insurance. The PPP also provides additional tax incentives and Texas
Catastrophe Property Insurance Association (TCPIA) assessment incentives
to encourage insurers to write the alternative PPP policy forms. Under the
MAP plan of operation, eligible applicants, who are residents of Class 2
areas, will be placed on an electronic bulletin board available to all 
participating
insurers, and thus are more likely to be able to access an insurer willing
to write the coverage sought. Otherwise qualified residents of Class 1 
underserved
areas are eligible for participation in the MAP, in addition to eligibility
for the PPP. 

In commenting on the selected factors and methodology used by the Department
to designate underserved areas, many commenters have acknowledged that there
is no perfect ordained set of factors. While keeping in mind the clear statutory
directive to establish geographically underserved areas, the Commissioner
has endeavored both to use direct measures of unavailability and other measures
which are likely indicators. Under the statutory language of Article 5.35-1,
sec.1(a), which permits the consideration of "any other relevant factors,"
(emphasis added) the Commissioner clearly has discretion to use these direct
and other likely indicator measures. The designations in this rule are the
initial designations under Articles 5.35-3 and 21.49-12 and, as such, must
be made before the PPP and MAP are actually operational. The Commissioner,
therefore, will consider the need to refine the factors in light of new data,
and intends to assess the data collected as the result of the operation of
the MAP and the PPP prior to the one-year anniversary date of the rule. 
Nevertheless,
the factors utilized are rational, are based upon a logical analysis, and
are well within the Commissioner's discretion. Further, the factors themselves
have been modified in light of public comment, and have been revised to 
incorporate
as much of the information gathered during the rulemaking process as possible. 
The factors and methodology outlined in subsection (e) enable the Commissioner
to determine whether residential property insurance is not currently reasonably
available or is potentially not reasonably available to a substantial number
of owners of insurable property in specific geographic areas of the state.
This determination was necessary to enable the Commissioner to designate
such areas as underserved for purposes of Articles 5.35-3 and 21.49-12. The
Department's process of developing the selected factors and scoring methodology
was quite extensive and was undertaken to assure that the process of determining
selection criteria for designating underserved areas was objective and relevant
to availability problems. This process included the review of extensive 
insurance
data, and economic and demographic data and included the following: (i) The
Department made a careful review of insurers' underwriting guidelines. (ii)
The Department reviewed the hearing transcript of the February 8, 1996, hearing
in Arlington, Texas; this hearing was called by the Commissioner for the
purpose of hearing from consumers, agents, and insurers on residential property
insurance availability problems in the Tarrant County-Dallas County area.
(iii) Beginning in the fall of 1995 at the initiation of the Department's
development of its designation process, the Department staff discussed 
availability
issues and measurement concepts with the executive committee of the Market
Assistance Program, which is composed of insurers, agents and public members,
during several of the committee's public meetings. Many other interested
parties, including representatives of Consumers Union and the Office of Public
Insurance Counsel, and legislative staff, attended the meetings of the MAP
Executive Committee at which the Department solicited ideas and suggestions
for methods of determining underserved areas for purposes of the MAP and
the PPP. As a result of these discussions, the executive committee members
submitted a letter to the Commissioner in February 1996 which expressed their
thoughts and recommendations. In this letter, the executive committee stated
that it is the committee's belief that underserved areas occur for a variety
of reason, many of which may be unrelated, and that the committee does not
believe there is any "litmus test" that defines and differentiates all 
underserved
areas, but rather, "there are many factors that come together in particular
parts of the state and create availability problems for consumers. The exact
mix may vary from region to region and we believe that it is important to
develop an approach that will allow for that fact. We believe that an objective
and reasonable determination of underserved areas might be made by looking
to the following factors: The replacement cost of the structures sought to
be insured and the relationship of that replacement cost to the actual market
value of structures sought to be insured in a geographically defined area;
the income level of residents; the proportion of houses built prior to 1950;
the existing number of homeowners policies relative to the number of houses
that are owner occupied; loss/premium ratios for specific perils in a 
geographically
defined area that are higher than the statewide average; theft, burglary
and crime statistics in a geographically defined area; the number and location
of agent's offices. In rural areas, the ratio of excess and surplus lines
coverage to coverage secured through standard markets; a regression analysis
of average premium cost in a geographically defined area in both license
and surplus lines markets; the distribution of deductibles relative to risk
amount for Clause 2; and Home Mortgage Disclosure Act data for loan denials
for owner occupied home purchases." The Department incorporated many of the
suggestions of the MAP Executive Committee in establishing the factors 
ultimately
adopted. (iv) The Department discussed availability issues and measurement
concepts with Representative Harold Dutton and Senator Rodney Ellis, the
legislative sponsors of the law that enacted Articles 5.35-3 and 21.49-12
of the Insurance Code requiring the Commissioner to designate areas as 
underserved
for purposes of residential property insurance. The Department also met with
Representative Dutton's and Senator Ellis' staff. (v) The Department discussed
availability issues with insurance agents and the agents' association. (vi)
Prior to finalizing the proposal, the Department received input from the
City of Dallas, the Dallas Homeowners League (an umbrella organization for
about sixty neighborhood and homeowners associations within the City of Dallas)
and State Senator Royce West who represents part of the City of Dallas regarding
availability in the city of Dallas and their desire for the city of Dallas
to be eligible for the Market Assistance Program. The Department utilized
this input in determining how to designate the City of Dallas underserved
areas. (vii) The Department discussed the issues of availability and measurement
concepts with Dr. Robert Klein, then director of research at the National
Association of Insurance Commissioners, and solicited his ideas for ways
to define and identify underserved areas. Dr. Klein has experience in 
determining
factors for the designation of underserved areas for residential property
insurance and worked in this area on behalf of various committees of the
National Association of Insurance Commissioners. As a result of this extensive
review and many discussions, the Department became aware that there was no
single simple comprehensive measure of residential property insurance 
availability,
and also as a result of this extensive review and many discussions, the 
Department
developed the selected factors and scoring methodology in subsection (e)
of this rule. 

Because there is no single comprehensive measure of whether residential
property insurance is or is not reasonably available to a substantial number
of owners of insurable property either on a statewide basis or in any particular
area of the state, the Commissioner, in addition to any direct measures of
availability, identified characteristics of particular geographic areas which
are likely to be associated with greater difficulty by consumers in obtaining
residential property insurance. The Commissioner considered underwriting
restrictions and requirements of insurers writing residential property insurance
in Texas that would limit availability of residential property insurance
coverages to a greater extent in some geographic areas than in others. Many
underwriting guidelines (the rules used by insurers to determine whether
or not to sell an insurance policy to a particular consumer and what, if
any, restrictions will be placed on the policy issued) have a differential
geographic impact. These guidelines include weather-related loss exposure,
type of dwelling, age of dwelling, minimum dwelling value, financial stability
of consumers, employment status of consumers, length of continuous employment,
occupation, and length of continuous residency. Based upon the review of
insurer underwriting guidelines and the Commissioner's authorization under
Article 5.35-3 and the Commissioner's mandate under Article 21.49-12 to 
establish
programs to increase the availability of residential property insurance in
designated underserved areas as well as the structure and methods of operation
of the PPP and the MAP, specific factors for analysis by ZIP Code area or
county were developed, and a scoring or point system was applied to each
of the factors. If the factor for a specific ZIP Code indicated actual or
potential difficulty for consumers in obtaining residential property insurance,
the ZIP Code was assigned one point. If the factor for a specific ZIP Code
indicated especially significant actual or potential difficulty for consumers
in obtaining residential property insurance, the ZIP Code was assigned two
points. ZIP Codes not receiving one or two points received zero points for
the specific factor. The factors considered are: low median household income,
low median value of owner-occupied homes, older median age of homes, high
percentage of dwelling to homeowners policies, high theft losses per policy,
number of surplus lines policies. Based on the factors and points assigned
to each factor, the number of points assigned were totaled by ZIP Code. Areas
with three or more points were identified as the most underserved or potentially
most underserved and generally designated as Class 1 underserved areas. Areas
with two points were identified as underserved or potentially underserved
and generally designated as Class 2 underserved areas. Generally, areas with
zero or one point were not designated as underserved areas. The designated
areas resulting from these general rules are modified on the following bases
as specified in subsection (e)(4): (i) Geographically contiguous areas of
two or more points are generally designated as Class 2 underserved areas
while geographically isolated areas with two or more points are not designated
as underserved to avoid identifying a random result; and groupings of ZIP
Codes with two or more points but with very few policies are not designated
as underserved areas to enable participating insurers to dedicate their initial
commitment of resources to underserved areas with the greatest potential
impact. (ii) Certain areas with zero or one point are designated as Class
2 underserved areas because of additional information available to the 
Department
regarding availability problems in certain areas. (iii) Certain areas with
two points, which are geographically contiguous with areas of three or more
points, are designated as Class 1 underserved areas in Harris and Bexar counties
and Bexar counties to create a geographically contiguous area of eligibility
for the Property Protection Program. (iv) Certain areas in the City of Dallas
with three or more points are designated as Class 2 underserved areas to
test for the effectiveness of the Market Assistance Program alone in addressing
insurance availability problems. The Department's scoring system allows several
factors to determine the outcome of the analysis. The scoring system requires
that either more than one factor be present for an area to achieve an 
underserved
availability ranking or that one factor shows by itself such severity that
an area earns an underserved availability ranking. This type of methodology
is fairly standard in a variety of fields, including insurance underwriting.
Some insurers use a scoring system for underwriting -- the presence or absence
of certain characteristics are assigned points and a certain point total
determines whether the insurer will or will not write the policy.  

Both Class 1 and Class 2 underserved areas are divided into three subgroups
in order to implement the MAP and PPP in a three-step phase-in at 90-day
intervals. The changes to subsections (c) and (d) -- the reduction in the
number of designated areas and the three-step phase-in of the designations,
were made in response to the concerns of commenters that insurers would have
difficulty applying scarce resources to all the underserved areas originally
proposed for designation. In this context, underserved areas means a grouping
of ZIP Codes designated by the Commissioner as underserved. 

In response to comments several changes were made to the section. Changes
were made to subsections (c) and (d) and the ZIP Code areas to be designated
as Class 1 and Class 2 underserved areas. Subsections (c) and (d) were changed,
respectively, to add new paragraphs (1), (2) and (3) to divide the ZIP Code
areas that have been designated as the Class 1 underserved areas into three
unique subgroups and to divide the Class 2 ZIP Codes into three unique 
subgroups,
and then to phase in the implementation of each subgroup into the MAP and
PPP at three-month intervals so that all ZIP Code areas in Class 1 and Class
2 will be phased in within six months. Paragraph (1) in subsections (c) and
(d) was added to designate the Class 1 and Class 2 ZIP Code areas that will
become effective October 15, 1996, which are more particularly described
as all or portions of the City of Houston, the City of San Antonio, the county
of Tarrant and the southernmost area of Texas -- Brooks, Cameron, Duval,
Hidalgo, Jim Hogg, Jim Wells (Class 2 only), Kennedy, Starr (Class 1 only),
Webb, Willacy and Zapata counties. Paragraph (2) in subsections (c) and (d)
was added to designate the Class 1 and Class 2 ZIP Code areas that will be
phased in on January 15, 1997, which are more particularly described as all
or portions of the seacoast area, including the county of Aransas, the county
of Nueces (Class 2 only), the county of Galveston (Class 2 only), the county
of Jefferson (Class 2 only), the county of Newton, the City of El Paso, the
City of Austin and the north-central area of Texas -- Armstrong (Class 2
only), Briscoe, Childress (Class 2 only), Collingsworth, Cottle (Class 1
only), Dickens, Donley (Class 1 only), Fisher, Foard (Class 2 only), Gray
(Class 1 only), Hall, Hardeman, Haskell, Jones (Class 2 only), Kent, King,
Knox, Lamb (Class 2 only), Lubbock, Motley (Class 1 only), Stonewall, Wheeler,
Wichita and Willbarger (Class 2 only) counties. Paragraph (3) in subsections
(c) and (d) was added to designate the Class 1 and Class 2 ZIP Code areas
that will be phased in on April 15, 1997, which are more particularly described
as all or portions of south Texas -- Dimmit, Frio and Zavala counties, northeast
Texas -- Camp, Fannin (Class 1 only), Hunt (Class 2 only), Lamar, Red River,
and Titus (Class 2 only) counties, and central Texas -- Brown (Class 2 only),
Callahan (Class 2 only), Coleman, Eastland, Hamilton, Limestone (Class 1
only), Lampasas (Class 2 only), Mason, McCullough, McLennan (Class 1 only),
Menard (Class 1 only), Mills, Palo Pinto, Runnels (Class 2 only), Robertson
(Class 1 only), San Saba, Shackelford (Class 1 only), Stephens (Class 1 only),
and Taylor (Class 2 only) counties. The specific details concerning the 
geographic
areas and counties and the dates on which they will be phased in are contained
in the lists of ZIP Codes in subsections (c) and (d) of the rule. 

Language was added to subsection (e)(1) in response to comments to clarify
that the Commissioner, in determining whether to designate an area as 
underserved,
considered both direct measures of residential property insurance availability,
such as number of surplus lines policies, and other identified characteristics
of particular geographic areas which are likely to be associated with greater
difficulty by consumers in obtaining residential property insurance. Language
regarding the weight placed on the potential for residential property insurance
not being reasonably available was deleted from subsection (e)(1) as redundant.
In subsection (e)(3)(B) relating to the factor of low median value of owner
occupied homes the language "to a greater extent" was added to clarify that
underwriting guidelines relating to minimum coverage requirements would be
more likely to affect consumers in areas with lower median housing values
than consumers in other areas. In subsection (e)(3)(C) relating to older
median age of homes the language "to a greater extent" was added to clarify
that underwriting guidelines relating to dwelling age would be more likely
to affect consumers in areas with older median housing age than consumers
in other areas. The Department has changed paragraph (3)(D) relating to high
percentages of dwelling to homeowners policies to explain that the Department
included this factor in its methodology based on the premise that a high
percentage of dwelling policies to homeowners policies in an area is a possible
indicator that insurers are restricting their writing of homeowners policies
in the area. The Department also changed paragraph (3)(D) to lessen the weight
of the "dwelling to total policies" factor in the scoring system by increasing
the amount necessary to generate one point for the ZIP Code to more than
50% and eliminating the two point award for this factor entirely. Language
was added to subsection (e)(4)(A) relating to modifications of geographically
contiguous underserved areas, to exclude grouping of ZIP Codes with two or
more points but with very few policies from designation as an underserved
area. This change results in a fewer number of geographic groupings of 
designated
ZIP Codes and, in conjunction with the phase-in of designations, enables
insurers participating in the MAP and PPP to more effectively participate
in the MAP and PPP. The language in subsection (e)(4)(A) was further changed
in the second sentence from "with two points" to "with two or more points"
because the same logic which maintains that geographically-isolated areas
with two points should not be designated as an underserved area is also valid
for an area with more than two points. In addition, the change to delete
additional geographically isolated ZIP Codes is responsive to comments that
the number of underserved areas in the proposal may be too great for insurers
to effectively participate initially. This reduction in the number of areas
(defined as clusters of one or more underserved ZIP Codes) along with the
three step phase-in, should serve to mitigate insurer problems in initial
participation. Language was added to subsection (e)(4)(B) relating to the
reasons that certain areas in the City of Dallas and Tarrant County with
zero or one point are designated as Class 2 underserved areas, to clarify
the source of the additional information that was relied upon in making these
designations. The source of the information relied upon was either testimony
from public hearings on residential property insurance availability problems
or from information provided by insurers as preparation for these public
hearings. In subsection (e)(4)(C), relating to certain areas with two points
that are designated as Class 1 underserved areas because they are geographically
contiguous with areas of three or more points, the designation of Tarrant
County as one of these areas was deleted due to the change in the dwelling
factor. As a result of the change in one of the factors -- percentage dwelling
to total policies -- the scoring system point totals changed for certain
ZIP Codes in Tarrant County with the result that there are no longer ZIP
Codes with two points where the exception of subsection (e)(4)(C) applies.
Under the scoring as proposed, three Class 1 ZIP Codes in Tarrant County
were geographically contiguous to other areas with two points. Under the
adopted scoring system, the Class 1 ZIP Codes are now geographically isolated
and are removed from designation. The reference to portions of Bexar County
as an underserved area in subsection (e)(4)(D) which consists solely of Class
1 designations has been deleted. As a result of the change in one of the
factors -- percentage dwelling to total policies -- the scoring system point
totals change for certain ZIP Codes in Bexar County with the result that
both Class 1 and Class 2 areas are designated in Bexar County. 

In subsection (f), relating to changes in Class 1 and Class 2 designations,
paragraphs (1)(A) and (1)(B) have been deleted. Other changes include the
deletion of the words "Class 2 underserved areas" and the addition of the
words "1 or Class" to paragraph (2). The effect of these changes is to remove
the requirement in the proposal that Class 1 designations could not be withdrawn
for three years and to allow any changes to Class 1 designations to be adopted
at any time. These changes were made in response to comments that the three-year
restriction on withdrawal of Class 1 designations was unnecessary and that
more flexibility was needed in withdrawing Class 1 designations. The Department
proposed the three-year restriction to encourage insurers to participate
in the PPP, which provides premium tax credit and TCPIA assessment incentives;
as a result of comments on the proposal, the Department became aware that
insurers disagreed that such restrictions were necessary to encourage 
participation.
Several changes in designations of underserved areas have resulted from
the changes in methodology to the section as proposed. The primary change
was a reduction in the weight assigned to one factor, the ratio of dwelling
policies in an area to the total number of homeowner and dwelling policies
in the area. As a result of this change, and the addition of Class 2 areas
in Bexar County, the designations of 35 ZIP Codes have been changed from
Class 1 to Class 2. Based on the changes to the weight applied to the dwelling
policy ratios and to the manner of identifying geographically isolated areas,
51 ZIP Codes previously designated as Class 1 areas and 37 ZIP Codes previously
designated as Class 2 areas are no longer designated as underserved. One
previously-undesignated Bexar County ZIP Code acquired a Class 2 designation
based on the decision to add Class 2 areas in Bexar County. 

To correct errors in application of the proposed methodology, or clerical
errors, 10 ZIP Codes previously designated as Class 1 areas and two ZIP Codes
previously designated as Class 2 areas are no longer designated as underserved,
and seven ZIP Codes initially not designated as underserved are designated
as Class 2 areas. To correct clerical errors, the following additional 
corrections
have been made: ZIP 75287 (county name changed from Dallas to Collin); ZIP
75487 (county name changed from Franklin to Titus); ZIP 76020 (county name
changed from Parker to Tarrant); ZIP 78241 (city name changed from Kelly
AFB to San Antonio); ZIP 78588 (city name changed from An Benito to San Benito).
As a result of the changes, the total number of ZIP Codes designated as
underserved has decreased from 517 to 427. The total number of ZIP Codes
designated as Class 1 areas has decreased from 259 to 163 and the total number
of ZIP Codes designated as Class 2 areas has increased from 258 to 264. 
As a result of the changes, the policies in areas designated as underserved
account for approximately 21.96% of total 1995 written premium instead of
approximately 22.60% for the policies in the areas originally proposed for
designation. Class 1 areas account for approximately 3.45% of the total premiums
in the state (down from 4.54%), and Class 2 areas account for 18.51% (slightly
higher than the 18.06% figure in the initial proposal). The 1995 written
premium for policies in the areas designated as Class 1 is approximately
$89.1 million as compared to $117.1 million for policies in areas originally
proposed for Class 1 designation. 

As a result of the changes, the share of 1995 policies written in areas
designated as underserved compared to the statewide total policies is 
approximately
22.24%, instead of 22.91% for the areas originally proposed for designation.
The share of 1995 policies written in areas designated as Class 1 is 
approximately
3.93% of the total number of policies in the state, down from 5.16% in the
areas originally proposed for Class 1 designation. The share of 1995 policies
written in areas designated as Class 2 is approximately 18.31%, up from 17.75%
in the areas originally proposed for Class 2 designation. 

In determining the factors and methodology outlined in subsection (e),
The Department relied upon 1990 Census data for determination of areas with
low median household income, low value of owner occupied homes and older
median age of homes. Analysis of the percentage of dwelling policies to 
homeowners
policies and theft losses per policy was based on 1994 and 1995 data collected
by the Department's residential property statistical agent in the Department's
Residential Property Statistical Plan. The number of surplus lines policies
was based on a Surplus Lines Special Data Call issued by the Department in
December 1995 for policy information for 1994 and 1995. The Department also
relied on materials included in the record of the September 5 hearing on
the proposed rule as part of the testimony of Birny Birnbaum, who was then
the Department's Chief Economist. These materials included: (1) A July 23,
1996, letter from Senator Royce West to the Commissioner, requesting that
underserved areas in the City of Dallas be designated Class 2, to act as
a test of the MAP; (2) the transcript of the Department's February 8, 1996,
public hearing on availability of residential property insurance held in
Arlington, Texas; (3) a February 1, 1996, letter from G. Ron Nichols, Chair
of the MAP Executive Committee, suggesting a number of factors that the 
Commissioner
could consider to determine underserved areas (a list of the members of the
MAP Executive Committee also was included as part of the record); (4) report
of the Office of Public Insurance Counsel (OPIC), February 14, 1996, entitled
A Review of Homeowners Insurance Underwriting Guidelines Used in Texas; (5)
an editorial in the National Underwriter on page 24 of the August 5, 1996,
issue regarding the July 1995 conciliation agreement between State Farm,
the United States Department of Housing and Urban Development (HUD), the
National Fair Housing Alliance (NFHA) and the Toledo Fair Housing Alliance
(TFHA); (6) an article in the August 8, 1996, issue of the Journal of Commerce
on Allstate's decision to eliminate certain underwriting guidelines relating
to homeowners insurance; (7) an August 14, 1996, article in the Wall Street
Journal on Allstate's decision to alter certain of its underwriting guidelines
relating to homeowners insurance; (8) the July 1995 Conciliation Agreement
between State Farm, HUD, NFHA and TFHA (Numbers 05-94-1351-8, 05-94-1352-8);
(9) the transcript of the December 16, 1994, public hearing held by the 
Department
on the proposed rule designating underserved areas for the purposes of 
establishing
credits and incentives for voluntary sale of automobile insurance; and (10)
information in spreadsheet evidencing, for certain Texas ZIP Codes, amounts
of premium collected on homeowners and dwelling policies and number of 
homeowners
and dwelling policies. The Department reviewed insurer underwriting guidelines
in selecting factors used in determining underserved areas, while protecting
the confidentiality of guidelines used by specific insurers as required by
the Insurance Code, Article 1.24D. The details of the process and results
of this review were presented by Mr. Birnbaum at the September 5 hearing
on the adoption of the rule. The Department has utilized information from
consumers, community leaders, and legislators; has obtained input from the
MAP Executive Committee; and has held public hearings across the state (Houston
and Big Spring in 1994 and Arlington in 1995). 

Subsection (a) specifies the purpose and scope of the new section. Subsection
(b) defines terms used in the section. Subsection (c) designates ZIP Code
areas as Class 1 underserved areas, and subsection (d) designates ZIP Code
areas as Class 2 underserved areas. Subsections (c) and (d) specify the ZIP
Code areas to be phased in a three-step process. Subsection (e) outlines
the factors and methodology used in determining which areas are designated
as underserved. Subsection (f) outlines the procedures for changing the Class
1 and Class 2 designations. Subsection (g) provides that the Department shall,
upon request, provide a quarterly listing of the number of residential property
insurance policies in force by type of policy by company by ZIP code or the
number of residential property insurance policies written by type of policy
by company by ZIP code. 

Subsections (c) and (d) designate two categories of underserved areas--Class
1 underserved areas and Class 2 underserved areas. As defined in subsection
(b), Class 1 underserved areas are those areas in which owners of insurable
property would be eligible for both the Property Protection Program pursuant
to Article 5.35-3 (which provides for a cafeteria-type approach to selection
of policy forms and endorsements) and the MAP pursuant to Article 21.49-12.
This definition is consistent with sec.5.10004 of this title. As specified
in sec.5.10004 of the MAP plan of operation (also sec.5.10004 of this
title), the policy forms and types of coverage that could be provided in
these areas are basic fire and extended coverage; named perils; broad form
named perils; additional named perils, either separately or in combination;
all risk coverage; and any other coverage available under policy forms and
endorsements promulgated pursuant to Articles 5.35 or 5.35-3 of the Insurance
Code or filed by an individual insurer pursuant to Article 5.35 and approved
by the Commissioner. Article 5.35-3, sec.3 requires that the policy forms
adopted for use in the Property Protection Program include a basic policy
covering fire and allied lines perils with endorsements providing additional
coverages at the option of the insured (i.e., cafeteria-type approach to
selection of policy forms and endorsements). Article 5.35-3, sec.4 provides
that the rates for these policies shall be determined in accordance with
the provisions of the Insurance Code applicable to each insurer. Pursuant
to Article 5.35-3, sec.5, in the areas designated as underserved, insurers
shall make available to their agents and all agents shall offer all insureds
the full range of coverages promulgated under Article 5.35-3 subject to the
applicable rates and underwriting guidelines of each insurer. In Class 1
designated underserved areas, consumers could purchase such coverage either
directly from the agent or obtain assistance in purchasing such coverage
through the MAP. Pursuant to Article 5.35-3, sec.6, the premium on all
policies written pursuant to Article 5.35-3 (i.e., policies promulgated pursuant
to Article 5.35-3 and written in areas designated as underserved pursuant
to Article 5.35-3) will not be subject to tax under Article 4.10 of the 
Insurance
Code. Pursuant to Article 5.35-3, sec.7, the premium on all policies written
pursuant to this article will not be considered net direct premiums under
the provisions of Article 21.49, sec.3(g) of the Insurance Code (Catastrophe
Property Insurance Pool Act). 

As defined in subsection (b), Class 2 designated underserved areas are
those areas in which owners of insurable property would be eligible for the
MAP pursuant to Article 21.49-12. This definition is consistent with sec.5.10004
of this title. As specified in sec.5.10004 of the MAP plan of operation,
the policy forms and types of coverage that could be provided in these areas
are basic fire and extended coverage; named perils; broad form named perils;
all risk coverage; and any other coverage available under policy forms and
endorsements promulgated pursuant to Article 5.35 of the Insurance Code or
filed by an individual insurer pursuant to Article 5.35 and approved by the
Commissioner. The cafeteria-type approach to selection of policy forms and
endorsements provided in Article 5.35-3 would not be available to consumers
in Class 2 underserved areas. Those consumers with availability problems
in these underserved areas would be eligible for assistance in obtaining
residential property insurance coverage from insurers participating in the
MAP. Such coverage would be provided through the standard promulgated 
residential
property insurance policies and endorsements. 

Consumers Union, City of Dallas, Texas Neighborhoods Together, and Dallas
Homeowners League. For with changes: Office of Public Insurance Counsel.
Against: Allstate Insurance Company, American Insurance Association (AIA),
Association of Fire and Casualty Companies in Texas (AFACT), National 
Association
of Independent Insurers (NAII), Texas Insurance Organization (TIO), and United
Services Automobile Association and USAA Casualty Insurance Company (USAA).
No position with changes: Alliance of American Insurers. 

Thirteen commenters submitted written comments and/or presented oral comments
at the September 5 hearing on the proposal. Two consumer groups and the City
of Dallas expressed support for the rule as proposed. One consumer group
expressed overall support for adoption of the proposal with one change. One
insurer trade association did not express support for or against the proposal
but recommended one change. Seven commenters, including three individual
insurers and four trade associations, expressed opposition to the adoption
of the rule as proposed with three of these commenters recommending that
the rule be withdrawn and reworked. The other four commenters proposed 
substantial
revision of the rule with two of these proposing an alternative rule that
specifies different criteria from the published rule. These two commenters
requested that the designated areas be revised consistent with their proposed
alternative criteria. Three of the commenters expressing opposition to the
proposal indicated support of the MAP and PPP concepts; one of these commenters
indicated that they will participate in the PPP and the MAP, and one commenter
indicated they will participate in MAP. One commenter commended the Department
for tireless efforts in creating and developing the MAP and stated that the
MAP plan of operation is both fair and workable. 

1. Statutory Standard

Six commenters stated that the proposal does not appear to comply with
the statutory standard for determination of underserved areas in Article
5.35-3, sec.1. 

Comment: Five commenters expressed concern that the proposal does not appear
to objectively determine areas where residential property insurance is not
reasonably available to a substantial number of owners of insurable property,
and instead relies only on the statutory standard of "other relevant factors."
One of these commenters stated that the two statutory standards should receive
equal consideration, but the Department has relied almost entirely on "other
relevant factors." Another commenter stated that the "other relevant factors"
must be relevant to the nondiscretionary standard of reasonable availability
to a substantial number of owners of insurable property, and therefore, any
"other relevant factors" considered must be shown to be related to the result
of residential property insurance not being reasonably available to a 
substantial
number of owners of insurable property. According to this commenter, the
proposed rule rationale fails to do this and therefore does not comply with
the standard required by Article 5.35-3, sec.1. Two commenters stated that
the proposal does not comply with the statutory standard because it is based
on potentialities, speculation and likelihoods, as opposed to hard evidence
of current availability.  

Response: The Department disagrees. It is the Department's position that
the rule does not rely only on the statutory standard of "other relevant
factors" and the Commissioner did adequately consider both elements of the
statutory standard. The Commissioner's analysis and application of the statutory
standard is as follows: (i) The Commissioner first considered the standard
of whether residential property insurance is or is not reasonably available
to a substantial number of owners of insurable property in the underserved
area, and the Commissioner determined that there is no single comprehensive
measure of whether residential property insurance is or is not reasonably
available to a substantial number of owners of insurable property either
on a statewide basis or in any particular area of the state. (ii) The 
Commissioner
identified two direct measures of unavailability-- the number of surplus
lines policies in an area and the evidence gleaned from testimony of consumers,
agents, and insurers at a public hearing held earlier this year in Arlington,
Texas. (iii) After determining that the two direct measures were not sufficient
in and of themselves to make the determination of areas with unavailability,
the Commissioner identified other factors of particular geographic areas
which are likely to be associated with greater difficulty by consumers in
obtaining residential property insurance. The Commissioner also considered
the purpose, structure, and intent of the PPP and the MAP to determine 
additional
relevant factors. The other relevant factors include low median household
income, low median value of owner-occupied homes, older median age of homes,
and high theft losses per policy and percentage of dwelling policies in an
area in relation to total dwelling and homeowners policies in the area. This
analysis is set forth in subsection (e) of the rule. It is the Department's
position that this analysis complies with the statutory standard, and that
the "other relevant factors" considered by the Commissioner are closely related
to lack of availability of residential property insurance and do not exceed
the discretion granted to the Commissioner. Underwriting guidelines represent
the rules used by insurers to determine whether or not to write a particular
policy and, if written, on what terms. Thus, the Department's review of 
underwriting
guidelines also provides a means of identifying factors for measuring insurance
availability. Many underwriting guidelines have greater impact on consumers
in some geographic areas than upon consumers in other geographic areas. The
position that some underwriting guidelines have differential geographic impact
is supported by Allstate's recent decision, as quoted in the August 14, 1996,
Wall Street Journal, to eliminate certain underwriting guidelines. Allstate,
the state's third largest residential property insurer in the state, in 1995,
wrote approximately 500,000 residential property policies in the state, which
constitutes 12% of all such policies written in Texas in 1995. Allstate notes
that by eliminating age of home and minimum value restrictions, Allstate
will write more business in inner cities. This is precisely the logic employed
in the rule. Thus, the commenters are incorrect that the Department did not
consider or rely upon any direct measures of whether insurance is not reasonably
available to a substantial number of owners of insurable properties. The
statute allows the Commissioner to consider "other relevant factors" without
any restrictions on what those factors might be or how those factors might
be used. The Department relied upon certain factors--geographically-contiguous
and geographically-isolated--to better ensure the success of the PPP and
the MAP for which the designations are being made. It is both reasonable
and proper to rely upon other factors to respond to the needs of insurers
who will participate in the two programs as well as to the needs of consumers
for whom each program is targeted. 

Comment: One commenter stated that the proposed rule and discussion does
not address the element of "substantial number of owners of insurable property"
in the statutory standard. According to this commenter, there is no discussion
or disclosure of the number of uninsured properties in any proposed ZIP code,
or comparison of the number of residential properties and number of residential
property policies in force, which would have direct bearing and relevance
on the determination which the Commissioner is required to make. One commenter
stated that while the Commissioner has some discretionary authority in 
designating
underserved areas, the law circumscribes his discretion to areas where a
substantial number of owners cannot reasonably obtain residential property
insurance. According to the commenter, the notion that a "substantial number"
of the 4,778,280 residents living in the 500 plus ZIP Codes designated as
underserved areas cannot reasonably obtain residential property insurance
is prima facie implausible, implying that the proposed rule may exceed the
Commissioner's authority under the law. 

Response: The Department disagrees. It is the Department's position that
Article 5.35-3, sec.1 grants the Commissioner the discretion to make the
determination of what constitutes "substantial number of owners of insurable
property." The legislature did not define "substantial" as used in Article
5.35-3, sec.1, and thereby recognized the fact that it is not an absolute
standard and may vary from area to area. For example, in a densely populated
inner city area, "substantial" may mean a small percentage of owners of 
insurable
property, but in a sparsely populated rural area, "substantial" may mean
a much larger percentage. It is the Department's position that whether the
"substantial" standard is met cannot be applied on a statewide basis as the
commenter has done, but must be determined on an area-by-area basis as supported
by the Department's analysis. The Department believes that the factors 
considered
and the methodology employed indicate that in each of the designated ZIP
Codes residential property insurance is not available to a substantial number
of consumers. The Department did examine insurance data on insured properties
by ZIP Code and did compare these data to Census data on residential properties
by ZIP Code and found the data unreliable. The Census data reflected 1990
experience, while insurance data reflected 1993 through 1995 experience.
The difference in time of evaluation makes the comparison unreliable. Moreover,
the Census data reports all properties, even uninsurable properties. The
Department considered and rejected this approach because of the absence of
reliable statewide data. The statute does not place a limit on the number
of areas the Commissioner may designate as underserved as long as the 
Commissioner
meets the statutory requirements. The commenter provides no reason why the
designation of 500 ZIP Codes is prima facie implausible nor does the commenter
provide a number that would be prima facie plausible. The Commissioner 
considered
appropriate factors and used a reasonable methodology. If the results of
such an analysis indicate 500 ZIP Codes, then 500 ZIP Codes are not only
prima facie plausible, but reasonable. 

Comment: Two commenters stated that the statute does not contemplate a
rule based on a rationale of "potentially not reasonably available." One
of these commenters stated that the statute uses present tense, and therefore,
the standard is where there are currently availability problems, and the
proposal goes beyond what the statute calls for. One commenter stated that
the proposal, however, is very unclear as to what standard is employed because
it does state that the Commissioner places great weight on the potential
for residential property insurance not being reasonably available to a 
substantial
number of owners of insurable property. 

Response: The Department disagrees. It is the Department's position that
the methodology used in the rule complies with the statutory standard. The
statutory standard in Articles 5.35-3 and 21.49-12 of the Insurance Code
provides that in determining which areas will be designated as underserved,
the Commissioner shall consider whether residential property insurance is
not reasonably available to a substantial number of owners of insurable property
in the underserved area and any other relevant factors as determined by the
Commissioner. It is the Department's position that this statutory standard
grants the Commissioner authority to consider direct measures of unavailability,
and if, upon consideration of these direct measures, the Commissioner determines
that there is no single comprehensive measure of whether residential property
insurance is or is not reasonably available, the Commissioner may consider
other relevant factors. Other relevant factors employed by the Commissioner
include factors that are indicative of a strong potential for residential
property insurance not being reasonably available--low median household income,
low median value of owner-occupied homes, older median age of homes, and
high theft losses per policy--and factors specifically related to the purpose
and intent of the PPP and the MAP--such as high percentage of dwelling policies.
It is the Department's position that the legislature did not intend to require
the Commissioner to consider only direct measures of unavailability if the
Commissioner determined that there were few or no reliable or adequate direct
measures of unavailability; further the statutory language in Article 5.35-3,
sec.1 supports this interpretation. 

2. Fiscal Note and Costs Analysis

Comment: Five commenters expressed concerns that the proposal appears to
contain no consideration of the fiscal impact that the proposal will have
on the state. These commenters stated that there are fiscal considerations
that the Department is obligated to assess in order to proceed with any proposal
to designate underserved territories, and that the proposal may not comply
with Article 1.03B of the Insurance Code and sec.2001.024(4) of the Government
Code. One commenter stated that the broad designation of underserved areas
has fiscal implications that will result from the rule's adoption, enforcement
or administration. The commenter contends that these implications are not
disclosed and are not the result of legislative enactment. According to this
commenter, designating 259 ZIP Codes as Class 1 underserved areas will have
a larger fiscal impact upon the tax revenue of the state than if different
criteria or a higher point total were used and this different methodology
resulted in a reduction in the number of ZIP Codes being designated. The
commenter stated that due to the exercise of the discretionary authority
granted in Article 5.35-3, the fiscal implication of reduced tax revenue
to the state should be stated. 

Response: The Department disagrees. It is the Department's position that,
as stated in the proposal, any fiscal implications to state government are
the result of the legislative enactment of Articles 5.35-3 and 21.49-12,
and not from the adoption or enforcement of this rule. This position is based
on the following reasons: (i) The premium tax credit provided in Article
5.35-3 was enacted by the legislature and not by the Commissioner in adopting
this rule. (ii) The premium tax credit applies only to those policies that
are promulgated pursuant to Article 5.35-3 (PPP policies) and that are written
in areas designated as underserved pursuant to Article 5.35-3 (Class 1 areas).
Although insurers must provide to their agents and the agents must offer
the PPP policies and endorsements, there is no requirement in statute or
rule that insurers write PPP policies; the writing of these policies is purely
at the option of insurers, and insurers may use their own underwriting 
guidelines
in determining whether to issue PPP policies. The Department has no way of
knowing how many insurers will write these policies, or the number of policies
that will be written by individual insurers--it could be many hundreds of
policies or none. (iii) There is no legal requirement that the Commissioner
consider the amount of the premium tax exemption in designating underserved
areas. (iv) The legislature in enacting Article 5.35-3 did not place any
cap or ceiling on premium tax credits. Accordingly, the legislature determined
that however few or however many PPP policies are written, each policy will
be subject to a premium tax credit, regardless of the fiscal impact on the
state's general revenue. The Department, however, estimates the potential
maximum impact on state revenues resulting from the premium tax credits for
PPP writings as follows: In 1995, total premium written in areas designated
as Class 1 under the adopted rule and eligible for PPP policies was 
approximately
$89 million. Based on the maximum statutory premium tax rate of 3.5% (applicable
to all insurers), and every policy currently written in the Class 1 areas
being converted to PPP policies, and including an average premium per policy
increase of 15% per year, the potential impact on state revenues in each
of the first five years the section is in effect will be $4.2 million, $4.8
million, $5.5 million, $6.3 million and $7.3 million, respectively. The minimum
impact on state revenue will be zero if no existing policies are converted
to PPP policies. Given that the actual average premium tax rate is 1.8%,
that likely only a fraction of all policies written in Class 1 areas will
be PPP policies and that average premium increases are likely to be less
than 10% annually, the impact of Article 5.35-3 premium tax credits on state
revenues is likely to be less than $3 million in each of the first five years
the new section will be in effect. The Commissioner, however, does not 
anticipate
that any insurers will convert existing residential property policies to
PPP policies for the purpose of receiving premium tax credit. The Commissioner's
expectation is based on the following: (i) Insurers are unlikely to convert
existing residential property policies to PPP policies as a means of reducing
taxes owed to the state at the expense of reducing coverage to some of their
policyholders. (ii) Such conversions by insurers defeats the purpose of 
designating
underserved areas for the writing of PPP policies, which are specifically
designed for individuals unable to purchase standard policies. (iii) Such
conversions could impose additional costs on insurers due to the need to
review existing policies and issue new PPP policy forms in lieu of the existing
policies. If the PPP results in insurers writing more policies in Class 1
areas than they would have written absent the PPP, insurers, of course, would
be entitled to premium tax credit on these new policies. However, premium
taxes collected because of any new policies written on risks not previously
insured will result in no loss to the general revenue because these new policies
never would have been written without the PPP. It is the Department's position
that the number of ZIP Codes is not the relevant measure for purposes of
determining the level of fiscal impact. The number of ZIP Codes designated
as Class 1 does not have a direct relationship with the amount of tax revenue
lost because of the premium tax credits of Article 5.35-3. Premium tax revenue
is a function of premium written, which, in turn, is a function of the number
of policies written and the amount of coverage and premium per policy. Thus,
one ZIP code in an urban area could account for 1000 times as much premium
and premium tax as one ZIP code in a sparsely-populated area. Ten ZIP Codes
could represent more premium tax revenue than 100 ZIP Codes, depending upon
the population and value of housing in the respective ZIP Codes. 

Comment: One commenter stated that the proposed rule appears to have failed
to state the economic costs to persons complying with the proposed section
as it relates to the non-consideration of premiums written in Class 1 
underserved
areas from net direct premiums under the provisions of sec.3(g) of Article
21.49 of the Insurance Code. The commenter stated that designating 259 ZIP
Codes as Class 1 underserved areas will have a larger economic cost resulting
from the non-consideration of premium for TCPIA assessment liabilities than
if different criteria were selected or a higher point total were used which
would result in a fewer number of ZIP Codes being designated as Class 1 
underserved
areas. According to the commenter, due to the exercise of the discretionary
authority granted in Article 5.35-3, the economic costs of reducing assessment
revenues or shifting of TCPIA assessment liabilities should be stated to
comply with Article 1.03B of the Insurance Code and sec.2001.024(4) of
the Government Code. The commenter stated that if overly large areas of the
state are designated as Class 1, an unintended incentive or disincentive
may be created which may encourage insurers to reduce writings in coastal
areas resulting in further reduction in assessment revenues or a 
disproportionate
assessment obligation being imposed upon insurers who continue to offer coverage
in the coastal areas. 

Response: The Department disagrees. It is the Department's position that
any fiscal impact on TCPIA assessments caused by the non-consideration of
premiums on all policies written pursuant to Article 5.35-3 are the result
of the legislative enactment of Articles 5.35-3 and 21.49-12, and not from
the adoption or enforcement of this rule. This position is based on the 
following
reasons: (i) The non-consideration of premiums on all policies written pursuant
to Article 5.35-3 for purposes of determining TCPIA assessment obligations
was enacted by the legislature and not by the Commissioner in adopting this
rule. (ii) The non-consideration of premiums for purposes of determining
TCPIA assessment obligations are provided only for those policies that are
promulgated pursuant to Article 5.35-3 (PPP policies) and that are written
in areas designated as underserved pursuant to Article 5.35-3 (Class 1 areas).
Although insurers must provide to their agents and the agents must offer
the PPP policies and all endorsements, there is no requirement in statute
or rule that insurers write PPP policies; the writing of these policies is
purely at the option of insurers, and insurers may use their own underwriting
guidelines in determining whether to issue PPP policies. The Department has
no way of knowing how many insurers will write these policies, or the number
of policies that will be written by individual insurers--it could be many
hundreds of policies or none. (iii) Article 5.35-3 does not require the 
Commissioner
to consider the impact to individual insurers' TCPIA assessment obligations
in designating underserved areas. (iv) The legislature in enacting Article
5.35-3 did not place any cap or ceiling on premium tax credits. Accordingly,
the legislature determined that however few or however many PPP policies
are written, each policy will be subject to a premium tax credit, regardless
of the fiscal impact on the state's general revenue. Moreover, the fiscal
impact on the TCPIA will be zero because the Article 5.35-3 credits against
TCPIA loss assessments will not alter the total amount of those loss 
assessments.
The Article 5.35-3 credits may shift the distribution of the credits among
insurers, but will not affect the total amount of the assessment. In addition,
the potential impact on individual insurers of the Article 5.35-3 premium
tax credit is difficult to estimate. The impact on TCPIA loss assessments
is completely a function of the amounts of PPP premium one insurer writes
relative to other insurers and such amounts are very difficult to estimate.
Any incentives or disincentives resulting from the designation of underserved
areas are the result of legislative enactment of Article 5.35-3 and not the
result of the adoption, enforcement or administration of this section. The
legislature clearly intended that the provision in Article 5.35-3 for credits
against TCPIA loss assessments would provide incentives to insurers to write
PPP policies. The commenter provides no explanation of why "an overly large
area" would provide disincentives, nor what level of designation would not
be overly broad, nor why any amount of PPP writings would provide a new 
disincentive
to write in the TCPIA area. Further, the Department believes that the 
commenters'
disincentive objection is without merit because insurers currently are already
reducing writings in coastal areas. Therefore, the Department does not believe
that the PPP will have any substantial impact on further reduction of writings
by the voluntary market in coastal areas. 

Comment: One commenter stated that the proposed rule also appears to have
failed to consider the economic costs to persons, i.e., consumers, agents,
and insurers, complying with the proposed section as it relates to the creation
and functional responsibilities of the Market Assistance Program, created
pursuant to Article 21.49-12. Staff of the Department and other resources
will be necessary to carry out the functions and monitoring of the Market
Assistance Program. According to the commenter, due to the exercise of the
discretionary authority granted in Article 5.35-3, the economic costs of
administering and monitoring of the Market Assistance Program should be stated
to comply with Article 1.03B of the Insurance Code and sec.2001.024(4)
of the Government Code. 

Response: The Department disagrees. It is the Department's position, as
stated in the proposal, that any possible costs to any person complying with
this rule or to the Department are the result of the legislative enactment
of Article 21.49-12 and not as a result of the adoption of this rule. No
one is required by statute or by rule to participate in the MAP; the MAP
is a purely voluntary program for insurers and agents. The Department specified
all costs for persons (consumers, agents, and insurers) who opt to participate
in the MAP in the proposal of the MAP plan of operation (28 TAC sec.sec.5.10001-
5.10015),
which was published prior to this rule proposal (and has since been adopted).
It is the Department's position that it is not appropriate or necessary to
repeat these same costs in the proposal of this rule. To do so in any meaningful
way would require providing an incredible amount of detail as to how the
MAP will operate; the MAP plan of operation consists of 70 pages. As is clear
from the preamble to this proposal, the designation in this rule of the 
underserved
areas pertaining to MAP can only be implemented under the MAP plan of operation.
This rule addresses only that part of Article 21.49-12 that authorizes the
Commissioner to designate underserved areas by rule using the standards 
specified
in Article 5.35-3, sec.1. As to the costs to the Department, the Department
will carry out its responsibilities for the PPP and MAP within the Department's
existing budget and will not seek additional funds for these purposes. The
expenses for development, promotion, and the operations of the electronic
systems for the MAP are fixed costs, including dedicated staff, software
development, and computer costs. A portion of the Department's costs for
operating the MAP varies with the number of applicants, so changes in the
number of underserved areas could have a minor impact on the Department's
costs. 

3. Subsection (e) - Factors and Methodology

a. General

Comment: Three commenters objected to the adoption of the proposal because
the methodology and designations are overly broad. One commenter stated that
the factors and methodology used to designate more than 500 Texas ZIP Codes
as underserved areas are flawed because it is not reasonable to believe that
29% of the state's land area, 26% of the state population, and 26% of the
housing units -- areas including entire cities -- are underserved areas.
This same commenter stated that the designated underserved areas are 
geographically
enhanced over what was expected. A fourth commenter stated that it is the
commenter's general impression that the size and scope of the underserved
areas selected may be too broad, but the commenter does not feel that the
use of different criteria would likely result in significant changes to the
overall program. 

Response: The Department has changed the section as proposed in subsection
(e)(4)(A) to provide that geographically isolated ZIP Codes with more than
two points (in lieu of only two points as proposed) are not designated as
Class 1 or Class 2 areas and to provide that groupings of ZIP Codes with
two or more points but with very few policies are not designated as Class
1 or Class 2 underserved areas. These changes are made to enable insurers
participating in the MAP and PPP to dedicate their initial commitment of
resources to underserved areas with the greatest potential impact. These
two changes reduce the number of geographically distinct areas that are 
scattered
over great distances around the state. These changes in conjunction with
other changes to the proposed rule result in 61 ZIP Codes changed from Class
1 to no designation; 37 ZIP Codes changed from Class 2 to no designation.
Total ZIP Codes changed from 517 as proposed to 427 ZIP Codes in the adopted
rule. The Department does not believe that the designations in the rule as
adopted are overly broad. To the contrary, the Department believes that the
designations are based on a sound, reasonable methodology that employs very
specific quantitative measures. In addition, the Department does not agree
that an analysis based on the number of ZIP Codes designated as underserved,
or the state's land area, population, or number of housing units, is a valid
means of gauging the extent or scope of the designated underserved areas.
Because the number of policies written in one ZIP code may be 1000 times
the number written in another, a count of ZIP Codes is a poor indicator of
the scope or extent of the designations under this rule. Similarly, because
policies per square mile or per thousand people may vary dramatically by
ZIP Code, these measures also do not meaningfully reflect the scope of the
designations. It is the Department's position that the most appropriate measure
of the scope or extent of the designations is the percentage of residential
property policies in designated areas to the total number of residential
property policies in the state. Another appropriate measure is the share
of residential property insurance premium in designated areas compared to
the total residential property insurance premium written in the state. The
following table, which is based on these two types of comparative measures,
illustrates the number of ZIP Codes, premium amount, and percentage of policies
in the adopted rule compared to the rule as proposed: 

Class 1 ZIPs As Adopted 163 As Proposed 259 

Class 2 ZIPs As Adopted 264 As Proposed 258

Total ZIPs As Adopted 427 As Proposed 517 

Class 1 Premium As Adopted 3.45% ($89.1 M) As Proposed 4.54% ($117.1M)
Class 2 Premium As Adopted 18.51% As Proposed 18.06%

Total Premium As Adopted 21.96% As Proposed 22.60% 

Class 1 Policies As Adopted 3.93% As Proposed 5.16% 

Class 2 Policies As Adopted 18.31% As Proposed 17.75%

Total Policies As Adopted 22.24% As Proposed 22.91% 

It is the Department's position that a valid analysis of whether the designated
underserved areas are reasonable may be made by comparing these areas to
those underserved areas designated pursuant to 28 TAC sec.5.206 for purposes
of private passenger automobile insurance. Voluntary market automobile policies
written in the underserved areas designated under 28 TAC sec.5.206 are
eligible for credits against an insurer's quota in the Texas Automobile 
Insurance
Plan Association. Voluntary market PPP policies written in Class 1 areas
are eligible for premium tax credit and for credits against an insurer's
loss assessment for the TCPIA. Insurers participating in the MAP receive
no tax credits or other incentives. The Department believes that an appropriate
and reasonable analysis of the breadth and scope of the designated underserved
areas under this rule is to compare the percentage of the state's private
passenger automobile policies in the underserved areas designated under 
sec.5.206,
which is 22.7%, to the percentage of the state's residential property policies
in the Class 1 designated underserved areas under this rule, which is 3.93%.
However, even if the sec.5.206 designations are compared to the combined
total of Class 1 and Class 2 designations under this section, the percentage
of automobile policies in the designated sec.5.206 areas, 22.7%, is still
higher than the combined percentage of residential property insurance policies
in Class 1 and Class 2 areas, 22.24%. The Department believes that these
comparisons support the Department's position that the commenters' objections
to the designations as "overly broad" are without merit. 

Comment: One commenter expressed concern that a broad designation of underserved
areas ignores the accomplishments of the Commissioner, Department, and the
insurance industry in making insurance more available in Texas in recent
years.  

Response: The Department disagrees. The designation of the underserved
areas for purposes of residential property insurance is authorized by Article
5.35-3 for purposes of the Property Protection Program and is mandated in
Article 21.49-12 for purposes of the voluntary Market Assistance Program.
The rule as adopted is changed and the number of areas designated as underserved
have decreased from 517 ZIP Codes in the proposal to 427 ZIP Codes in the
adopted rule. The Department believes that the adopted designations will
complement the other efforts by the Commissioner and the Department (such
as the adoption of large deductibles) and the insurance industry (such as
loosening of underwriting restrictions by some large insurers) that are 
currently
underway. These initiatives, however, have not been in effect for a sufficient
period of time to enable the Department to determine any impact on residential
property insurance availability.  

Comment: One commenter also expressed concern that the designation of major
portions of Texas as underserved will be taken out of context and misused
by some as evidence of insurance industry "redlining." The commenter requested
that the proposed text be clarified to indicate that the ZIP Codes identified
"may" include areas that are underserved. 

Response: The Department disagrees. It is the Department's position that
the designation of underserved areas in this rule is not a legitimate basis
for allegations of "redlining." The size of the areas designated in Harris
County, Tarrant County, and Dallas County should indicate that equating 
designation
with redlining is fallacious. It is the Department's position that the 
designation
in this rule will actually discourage any claims of redlining. It is also
the Department's position that the alleged potential that these designations
will be taken out of context and misused is not a valid public policy reason
for not making the designations, so long as the designations are based on
sound methodology. Any action undertaken by the Commissioner could be taken
out of context and misused, if one were so inclined. The Department believes
that the relevant standards for judging the reasonableness of the adopted
designations is not the potential for misuse of this information, but the
quality, logic and evidence supporting the designations. The Department 
disagrees
that the rule should be changed to indicate that the ZIP Codes "may" include
areas that are underserved, because such a change would not comply with the
statutory standard in Article 5.35-3, which provides that the Commissioner
may determine and designate areas as underserved areas for residential property
insurance, and in Article 21.49-12, which requires the Commissioner to establish
a voluntary market assistance program to assist insureds in Texas in obtaining
residential property insurance in underserved areas which shall be determined
and designated by the Commissioner by rule using the standards specified
in Article 5.35-3, sec.1. 

Comment: Three commenters stated that analysis of consumer complaints and
comments would provide a less subjective way for the Department to identify
underserved areas. One of these commenters, who disagreed with the relevant
factor methodology used by the Department to determine which areas to designate
as underserved, expressed surprise that the proposal failed to take into
account any of the information and data the Department has compiled in 
communicating
with actual consumers. In the commenter's view, plotting a map of areas where
the comments and complaints have been most frequent should be one of the
starting points in determining areas where residential property insurance
is not reasonably available to a substantial number of owners of insurable
property. The commenter stated that if the data on hand at the Department
were not sufficient, a consumer survey or survey of legislative and municipal
leaders throughout Texas could also help define the areas in need of assistance.
The commenter stated that actual consumer complaints and comments provide
a better measure of the place where true availability problems are occurring.
A fourth commenter stated that, in contrast to the "other factors" regarded
by the Department as the only viable alternative for designating underserved
areas, credible, scientifically viable means of determining the availability
of property insurance do exist. They are the market research tools employed
every day across the country by thousands of businesses bent on finding out
whether there is an underserved market for their products. Standard market
research techniques--polls, focus groups, intercepts, consumer and agent
surveys--could readily be employed by the Department to estimate more accurately
whether or not a given ZIP code is underserved. 

Response: The Department disagrees that the proposal's reliance on statistical
data, rather than relying solely on information from actual consumers and
community leaders, is an improper approach. It is the Department's position
that the approach used by the Department for designating underserved areas
for purposes of Articles 5.35-3 and 21.49-12 is an objective and non-arbitrary
approach for which there is a rational basis. The Department's approach is
objective in that it relies on actual factors that are rooted in how insurers
actually operate to deny insurance to certain risks, rather than on personal
feelings or prejudice. The Department's approach is non-arbitrary and rational
in that the Department did not select any of the factors forming the basis
of the determination process at random, and in fact, all of the factors,
were selected because they are or are very likely to be associated with greater
difficulty by consumers in obtaining residential property insurance. The
scoring system applied to these factors by the Department in developing an
initial availability ranking for each ZIP Code is a reasonable method to
allow several factors to determine the outcome of the analysis. The scoring
system requires that either more than one factor be present for an area to
achieve an underserved availability ranking or that one factor shows by itself
such severity that an area earns an underserved availability ranking. The
methodology is fairly standard in a variety of fields, including insurance
underwriting. Some insurers use a scoring system for underwriting -- the
presence or absence of certain characteristics are assigned points and a
certain point total determines whether the insurer will or will not write
the policy. While the Department has utilized information from consumers,
community leaders, and legislators; has obtained input from the MAP Executive
Committee; and has held public hearings across the state (Houston and Big
Spring in 1994 and Arlington in 1995), the Department disagrees that consumer
comments and complaints would provide a less subjective, more reliable measure
of availability problems than the methodology employed by the Department.
The Department did not rely solely upon on consumer surveys because the 
Department's
experience in recent months with surveys of consumers and their automobile
insurance purchases indicates that the results of such surveys produce a
limited ability to draw inferences to broader populations. The Department
has also learned through these surveys that many consumers do not know certain
technical aspects of their insurance policies and are not aware of distinctions
in types of rates and insurers--i.e., preferred, standard or non-standard
rates; regulated, non-rate regulated or non-admitted insurers--and of the
scope of responsibilities of agents versus those of insurers. Moreover, the
size and cost of a consumer survey to evaluate insurance availability throughout
Texas would have been prohibitive. The purpose of a survey is to obtain 
information
and results which can then be inferred to the population at large. Inferences
from a sample to the population require a certain sample size. Even assuming
a survey might have produced useable results, the size of a sample necessary
to determine insurance availability in the approximately 2,500 Texas ZIP
Codes would have been in the hundreds of thousands. The Department also 
disagrees
that a review of complaints, a survey or a poll is a less subjective approach
to determining insurance availability than the methodology employed by the
Department. The Department's methodology is grounded in verifiable facts
-- actual theft losses, actual median age of homes, actual underwriting 
guidelines
used by insurers, actual median housing value, actual surplus lines policies
issued. In contrast, the commenter suggests the Department rely upon 
conversations
with consumers when the results of the conversations can depend upon a variety
of subjective factors. Scientifically, such a sample is not valid for drawing
inferences to the population at large. In addition, the number of relevant
consumer complaints numbers about 1,000 for the past two years. This relatively
small number is inadequate for drawing inferences to a population in about
2,500 Texas ZIP Codes. The results of a consumer survey can be very subjective
in that its results can turn on the manner that the question or questions
are phrased. It is likely that the survey itself would be a source of conflict
and disagreement as each interested party sought to interpret the results
of the survey in the party's own best interests. In sum, while the Department
relied upon input from consumers to supplement the basic fact-based, objective
methodology, the Department does not agree with the commenter that such input
alone should determine underserved areas. The Department also disagrees that
utilization of market research tools such as polls, focus groups, intercepts,
consumer and agent surveys would constitute a viable alternative for designating
underserved areas. The cost would be significant and the benefit would be
highly questionable. In particular, the validity and statistical reliability
of the data that would be obtained from the utilization of such tools is
questionable due to the sample base that would be used to obtain the data.
The Department believes that the information obtained from the use of these
tools would be more subjective than objective and does not believe that it
is appropriate to use these type of tools for the initial designation of
the underserved areas. 

b. Selected Factors

All seven commenters opposing the adoption of the proposal objected to
the use of the selected factors in subsection (e) to determine the underserved
areas. 

Comment: Six commenters stated that the Department had provided either
insufficient or no data to support the Department's contention that the factors
specified in subsection (e) to determine underserved areas actually are relevant
to such a determination. These commenters stated that the selected factors
were either arbitrary or irrelevant or both. 

Response: The Department disagrees. The relevance of the chosen factors
is discussed in subsection (e) of the proposed rule in paragraphs (1)-(3).
A plain reading of these paragraphs indicates why these factors were chosen,
how they were chosen, and how they are related to lack of availability, limiting
of availability, or difficulty in obtaining residential property insurance.
It is the Department's position that the selected factors are not arbitrary
and are certainly relevant to availability of residential property insurance.
The approach used by the Department for designating underserved areas for
purposes of Articles 5.35-3 and 21.49-12 is an objective and non-arbitrary
approach for which there is a rational basis. The Department's approach is
objective in that it relies on actual factors that are rooted in how insurers
actually operate to deny insurance to certain risks and not on subjective
factors such as personal feelings or prejudice. The Department's approach
is non-arbitrary and rational in that none of the factors were selected at
random, and in fact, all of the factors, which form the basis of the 
determination
process, were selected because they are likely to be associated with greater
difficulty by consumers in obtaining residential property insurance. Three
of the factors--low median household income, low median value of owner-occupied
homes, and older median age of homes--are underwriting guidelines used by
many insurers to decline coverage for certain risks. The guidelines of all
insurers writing residential property insurance in Texas are on file with
the Department; these guidelines are confidential by law. The Department
has reviewed these underwriting guidelines and based on that review has 
determined
that many insurers use these three factors to decline coverage for certain
risks. The Department's position that these three factors are relevant to
availability is supported by the following: (i) The Office of Public Insurance
Counsel released a report in February 1994 entitled A Review of Homeowners
Insurance Underwriting Guidelines Used in Texas. That report shows that insurers
writing over 90% of the market in Texas have minimum coverage guideline 
restrictions,
claims guideline restrictions, age guideline restrictions--88% of the insurers
have guidelines relating to age of homes; 60% have guidelines relating to
location of homes; 53% have guidelines relating to occupation; 29% have 
guidelines
relating to lifestyle; 22% have guidelines relating to credit; and 19% have
guidelines relating to employment stability. This report clearly shows that
there are a large number of insurers that use underwriting guidelines that
were the subject of the Department's factors relating to low median household
income, low median value of owner-occupied homes, and older median age of
homes. (ii) In addition, the Department can point to recent actions by some
of the larger insurers. . State Farm, the largest residential property insurer
in the state, in 1995 wrote approximately 1.35 million policies in the state,
which constitutes 31.5% of all residential property policies written in Texas
in 1995. State Farm has entered into a conciliation agreement with the National
Fair Housing Alliance and the Toledo Fair Housing Center and the Department
of Housing and Urban Development in which State Farm voluntarily agrees to
eliminate minimum coverage eligibility amounts, to eliminate eligibility
requirements linked to construction date cutoffs, and agrees that any decision
to decline coverage for an individual will not be based solely on information
in credit reports. Under the conciliation agreement, State Farm agreed to
discontinue its practice of not declining coverage solely because another
company did so or because the property was insured under a state FAIR Plan.
State Farm agreed to modify its eligibility guidelines to lessen subjective
terminology, including but not necessarily limited to elimination of pride
of ownership. These agreed actions by State Farm clearly support the 
Department's
position that the selected factors of low median household income, low median
value of owner-occupied homes, and older median age of homes relate to insurance
availability. (iii) Also, the selection of these three factors is supported
by actions taken by Allstate which are explained in an August 14, 1996, article
in the Wall Street Journal, entitled "Allstate Relaxes Standards on Selling
Homeowners Policies in Poor Areas." This article states that the company,
which insures one of every eight houses in the U.S., quietly began phasing
in certain revisions in its underwriting restrictions in April. According
to this article, Allstate is scrapping restrictions in urban areas that 
generally
prohibit sale of policies for homes valued at less than $40,000 or older
than 40 years. In this article, Allstate has said that it makes good business
sense to scrap the underwriting guidelines related to value and age of homes
and that they will sell more policies in urban areas as a result of that.
Allstate, the state's third largest residential property insurer in the state,
in 1995, wrote approximately 500,000 residential property policies in the
state, which constitutes 12% of all such policies written in Texas in 1995.
It is the Department's position that the other three selected factors--high
theft losses per policy, high percentage of dwelling to homeowners policies,
and number of surplus lines policies-- are relevant measures of results brought
about by consumers having difficulty in obtaining residential property 
insurance.
The theft loss factor is based on the premise that because of insurers' 
perception
of high theft losses in certain areas, insurers are reluctant to sell policies
which include theft coverage. Most insurers' underwriting guidelines 
specifically
address theft losses either because of frequency or severity of loss. The
fact that theft losses are part of most insurers' underwriting guidelines
is an indication that insurers are concerned with theft exposure. Any areas
with theft losses above the statewide average are likely to be areas that
insurers will invoke underwriting restrictions. Consumers in high theft areas,
therefore, have less availability of all kinds of coverage. The Department
considers this factor particularly significant for purposes of the PPP under
which policies may be sold without theft coverage, thereby creating the 
potential
for greater availability of all types of homeowners coverage in areas with
high theft losses. It is the Department's position that while the percentage
of dwelling policies factor is not a perfect indicator of availability, it
is of some significance because if insurers write coverage for low value
dwellings they often write dwelling policies (rather than homeowners) which
do not always provide all of the coverage that the consumer wants or needs
(no liability coverage, for instance). The PPP which provides a cafeteria-type
approach to selection of policy forms and endorsements allows more flexibility
for consumers in designing coverages that they need and can afford and allows
more flexibility for insurers to write coverages which they are willing to
write in certain areas. Thus, the PPP is likely to be most effective in areas
where there are a large number of dwelling policies. However, because the
Department agrees with those commenters who stated that the dwelling factor
carries too much weight in the scoring system, the Department has changed
the rule as proposed to lessen the weight of this factor by increasing to
50% or more the percentage of dwelling to total policies necessary to generate
one point and is eliminating the assignment of two points from this factor.
It is the Department's position that the number of surplus lines policies
factor is a direct measure of residential property insurance availability
because consumers who are unable to obtain coverage in the regulated or admitted
market have to obtain coverage in the unlicensed surplus lines market. By
statute, Article 1.14-2, sec.5(a), a surplus lines policy cannot be issued
unless coverage cannot be procured after a diligent effort to do so has been
made. The surplus lines policies may provide less coverage than the promulgated
policy forms of regulated insurers for much higher premium costs. The 
Department's
process of developing the selected factors and scoring methodology was quite
extensive and was undertaken to assure that the process of determining selection
criteria for designating underserved areas was objective and relevant to
availability problems. This process included the review of extensive insurance
data, and economic and demographic data and included the following: (i) The
Department made a careful review of insurers' underwriting guidelines. (ii)
The Department reviewed the hearing transcript of the February 8, 1996, hearing
in Arlington, Texas; this hearing was called by the Commissioner for the
purpose of hearing from consumers, agents, and insurers on residential property
insurance availability problems in the Tarrant County-Dallas County area.
(iii) Beginning in the fall of 1995 at the initiation of the Department's
development of its designation process, the Department staff discussed 
availability
issues and measurement concepts with the executive committee of the Market
Assistance Program, which is composed of insurers, agents and public members,
during several of the committee's public meetings. Many other interested
parties, including representatives of Consumers Union and the Office of Public
Insurance Counsel, and legislative staff, attended the meetings of the MAP
Executive Committee at which the Department solicited ideas and suggestions
for methods of determining underserved areas for purposes of the MAP and
the PPP. As a result of these discussions, the executive committee members
submitted a letter to the Commissioner in February 1996 which expressed their
thoughts and recommendations. In this letter, the executive committee stated
that it is the committee's belief that underserved areas occur for a variety
of reason, many of which may be unrelated, and that the committee does not
believe there is any "litmus test" that defines and differentiates all 
underserved
areas, but rather, "there are many factors that come together in particular
parts of the state and create availability problems for consumers. The exact
mix may vary from region to region and we believe that it is important to
develop an approach that will allow for that fact. We believe that an objective
and reasonable determination of underserved areas might be made by looking
to the following factors: The replacement cost of the structures sought to
be insured and the relationship of that replacement cost to the actual market
value of structures sought to be insured in a geographically defined area;
the income level of residents; the proportion of houses built prior to 1950;
the existing number of homeowners policies relative to the number of houses
that are owner occupied; loss/premium ratios for specific perils in a 
geographically
defined area that are higher than the statewide average; theft, burglary
and crime statistics in a geographically defined area; the number and location
of agent's offices. In rural areas, the ratio of excess and surplus lines
coverage to coverage secured through standard markets; a regression analysis
of average premium cost in a geographically defined area in both license
and surplus lines markets; the distribution of deductibles relative to risk
amount for Clause 2; and Home Mortgage Disclosure Act data for loan denials
for owner occupied home purchases." (iv) The Department discussed availability
issues and measurement concepts with Representative Harold Dutton and Senator
Rodney Ellis, the legislative sponsors of the law that enacted Articles 5.35-3
and 21.49-12 of the Insurance Code requiring the Commissioner to designate
areas as underserved for purposes of residential property insurance. The
Department also met with Representative Dutton's and Senator Ellis' staff.
(v) The Department discussed availability issues with insurance agents and
the agents' association. (vi) Prior to finalizing the proposal, the Department
received input from the City of Dallas, the Dallas Homeowners League (an
umbrella organization for about sixty neighborhood and homeowners associations
within the City of Dallas) and State Senator Royce West who represents part
of the City of Dallas regarding availability in the city of Dallas and their
desire for the city of Dallas to be eligible for the Market Assistance Program.
The Department utilized this input in determining how to designate the City
of Dallas underserved areas. (vii) The Department discussed the issues of
availability and measurement concepts with Dr. Robert Klein, then director
of research at the National Association of Insurance Commissioners, and 
solicited
his ideas for ways to define and identify underserved areas. Dr. Klein has
experience in determining factors for the designation of underserved areas
for residential property insurance and has done a lot of work in this area
on behalf of various committees of the National Association of Insurance
Commissioners. As a result of this extensive review and many discussions,
the Department became aware that there was no single simple comprehensive
measure of residential property insurance availability. As a result of this
extensive review and many discussions, the Department developed the selected
factors and scoring methodology in subsection (e) of this rule. 

Comment: Three commenters stated that the Department erred in concluding
that insurers used these factors in underwriting guidelines to deny coverage.
One commenter stated that as the fourth largest writer of residential property
insurance in Texas, it does not use the cited criteria to decline to issue
policies. The commenter criticized the Department for failure to discuss
or disclose the method or manner in which the underwriting restrictions are
used. The same commenter asserted that these factors are used as guidelines
but that underwriting is accomplished through the consideration of numerous
factors and not solely upon any single restriction from which the criteria
were drawn. Another commenter stated that insurers might consider the factors
for determining rates, rather than for determining whether they would provide
coverage. This same commenter stated that there may be other factors that
companies use to determine that they will not write certain risks, and the
commenter believes that these factors are legitimately "other relevant factors"
that the Department can use in determining underserved areas. 

Response: Based on a thorough review of underwriting guidelines used by
property insurers in this state, it is the Department's position that the
underwriting guidelines selected for purposes of this rule are legitimately
"other relevant factors" and that these guidelines are used by many insurers
to determine whether or not to provide residential property insurance coverage
on a risk. The Department did not presume that all insurers decline to write
risks based on a single underwriting guideline, though this is true in some
instances. The Department understands that there are undoubtedly numerous
underwriting guidelines that have conditions attached to the guideline, meaning
some risks may be acceptable for insurance while others are not. It is the
Department's position that certain factors used by the Department--low median
household income, low median value of owner-occupied homes, older median-age
of homes, and high theft losses per policy--for determining underserved areas
reflect a large number of insurers' underwriting guidelines which are used
by these insurers to specifically exclude the consideration of any risk with
these characteristics. The Department believes that the reason that the fourth
largest writer of residential property insurance in Texas does not use the
cited criteria is because the commenter has a unique customer base, whose
circumstances do not fit the circumstances typically found in underserved
areas. Because of the commenter's customer base, the commenter is less likely
than insurers who do not have such a customer base to use guidelines related
to age of risk, value of risk, and income and employment of an individual.
The comment that insurers might consider the factors for determining rates
rather than for determining whether to provide coverage is speculation on
the part of the commenter. The commenter offers no basis for such a statement,
and since underwriting guidelines are considered confidential information
of individual insurers there does not appear to be any support for this 
statement.
The Department's review of the guidelines does not support the observation
of the commenter that factors such as those used in the Department's designation
of underserved areas relate to rates. 

Comment: One commenter stated that while the commenter did not doubt the
accuracy of the data used by the Department in developing the proposal, the
Department should have identified the sources of the data. 

Response: The Department relied upon 1990 Census data for determination
of areas with low median household income, low value of owner occupied homes
and older median age of homes. Analysis of the percentage of dwelling policies
to homeowners policies and theft losses per policy was based on 1994 and
1995 data collected by the Department's residential property statistical
agent in the Department's Residential Property Statistical Plan. The number
of surplus lines policies was based on a Surplus Lines Special Data Call
issued by the Department in December 1995 for policy information for 1994
and 1995. The Department also relied on materials included in the record
of the September 5 hearing on the proposed rule as part of the testimony
of Birny Birnbaum, who was then the Department's Chief Economist. These 
materials
included: (1) A July 23, 1996, letter from Senator Royce West to the 
Commissioner,
requesting that underserved areas in the City of Dallas be designated Class
2, to act as a test of the MAP; (2) the transcript of the Department's February
8, 1996, public hearing on availability of residential property insurance
held in Arlington, Texas; (3) a February 1, 1996, letter from G. Ron Nichols,
Chair of the MAP Executive Committee, suggesting a number of factors that
the Commissioner could consider to determine underserved areas (a list of
the members of the MAP Executive Committee also was included as part of the
record); (4) OPIC's February 14, 1996, report entitled A Review of Homeowners
Insurance Underwriting Guidelines Used in Texas; (5) an editorial appearing
in National Underwriter on page 24 of the August 5, 1996, issue regarding
the July 1995 conciliation agreement between State Farm, the United States
Department of Housing and Urban Development (HUD), the National Fair Housing
Alliance (NFHA) and the Toledo Fair Housing Alliance (TFHA); (6) an article
appearing in the August 8, 1996, issue of the Journal of Commerce on Allstate's
decision to eliminate certain underwriting guidelines relating to homeowners
insurance; (7) an August 14, 1996, article in the Wall Street Journal on
Allstate's decision to alter certain of its underwriting guidelines relating
to homeowners insurance; (8) the July 1995 Conciliation Agreement between
State Farm, HUD, NFHA and TFHA (Nos. 05-94-1351-8, 05-94-1352-8); (9) the
transcript of the December 16, 1994, public hearing held by the Department
on the proposed rule designating underserved areas for the purposes of 
establishing
credits and incentives for voluntary sale of automobile insurance; and (10)
information in spreadsheet evidencing, for certain Texas ZIP Codes, amounts
of premium collected on homeowners and dwelling policies and number of 
homeowners
and dwelling policies. The Department relied upon insurer underwriting 
guidelines
in selecting factors used in determining underserved areas, while protecting
the confidentiality of guidelines used by specific insurers as required by
the Insurance Code, Article 1.24D. The Department has utilized information
from consumers, community leaders, and legislators; has obtained input from
the MAP Executive Committee; and has held public hearings across the state
(Houston and Big Spring in 1994 and Arlington in 1995). 

Comment: Two commenters suggested that the Department needed to look at
other data such as the number of single family dwellings on the tax rolls
in county appraisal districts, and that it would be easy to compare that
number to insured property. 

Response: The Department disagrees. Information from county appraisal districts
is not readily available from all districts or in an appropriate format for
analysis. While information on insured properties is available, reliable
up-to-date data to measure insurable properties statewide is not available
from any source. Census data provide the number of residential property units,
but these data provide a picture of 1990, not of current experience. The
census data do not indicate whether the property was insurable at all, whether
the consumers sought insurance, or whether the rental property was insured
on a commercial basis. While the Department believes that the commenter's
suggestion would be useful information, the inability to acquire this 
information
on a statewide basis renders the recommended approach not feasible. 

Comment: Two commenters, who criticized the specific factors in subsection
(e) as possibly not being relevant, proposed an alternative rule which, 
according
to the commenters, is more flexible and consistent with past actions in applying
similar statutes (Article 21.49) and requested that the designated underserved
areas be revised consistent with the factors urged in the proposed revision.
The commenters' alternative proposes deleting reference to great weight being
placed on residential property insurance not being reasonably available to
a substantial number of owners of insurable property and substituting weight
on the statutory standards and other relevant factors to determine whether
residential property insurance is reasonably available to a substantial number
of owners of insurable property. Under the commenter's alternative the relevant
factors include: (i) Complaints received by the Department from consumers
which indicate actual or potential difficulty for consumers in obtaining
residential property insurance in a particular ZIP Code, city, or county;
(ii) underwriting--if underwriting guidelines of a significant number of
companies with significant market impact reflect restrictions that could
limit availability of insurance, then consideration will be given to its
impact in specific ZIP Code, city, or counties; examples of such underwriting
restrictions could include guidelines relating to the minimum values of homes
and age of homes; (iii) high concentration of surplus lines residential property
policies; (iv) information from advisory groups; and (v) other relevant 
information
on availability as necessary to add additional areas as underserved or to
remove areas as designated underserved areas. 

Response: The Department disagrees. The Department believes that the commenters'
proposal is subject to a variety of interpretations, and as such is too vague
to meet legal sufficiency requirements. In contrast, the Department's 
methodology
is based upon specific assumptions, which can be tested. Any interested observer
could review the methodology adopted by the Commissioner and the underlying
data provided by the Department and replicate the results of the analysis.
The commenters' proposed rule is sufficiently subjective that the Commissioner
could interpret the criteria of the commenters' proposal as completely 
consistent
with the criteria used in the Department's methodology, and thus, the 
Commissioner
could obtain the exact same results under the commenters' proposal. The 
commenter
proposed using five criteria: consumer complaints, underwriting guidelines,
surplus lines policies, information from advisory groups and other relevant
factors. The Department studied and considered consumer complaints presented
at public hearings and to the Department's Consumer Protection division.
The Department considered underwriting guidelines and developed several factors
as a result -- age of home, median housing value, and median household income.
The Department considered surplus lines policies and developed a factor 
measuring
surplus lines policies in a geographic area in comparison to statewide results.
The Department obtained and relied upon the input from a formal advisory
group -- the MAP Executive Committee. The Department relied upon other relevant
information, including theft losses in a geographic area, percentage of dwelling
to total policies, testimony at public hearings. Thus, the Department's original
methodology and designations--exactly as proposed--comply with the requirements
of the commenters' proposed rule. However, the Department believes that 
radically
different results could also be obtained under the commenters' proposed rule. 
Under the Department's adopted methodology, the outcome is much more predictable
and the basis for the eventual designations can be tested objectively by
all interested parties. This is not necessarily true of the commenter's 
proposal.
With the commenters' proposed rule, any number of results could be obtained
with no requirement for explanation or justification. 

Comment: Three commenters objected to the factor relating to high theft
losses per policy. One commenter stated that portions of the proposal seem
to overlook the fact that the rationale in creating the MAP and PPP was to
bring insurers together with owners of insurable properties who have been
unable to reasonably obtain insurance in their area. According to the commenter,
the high theft rate factor seems designed to define areas where there are
a substantial number of "uninsurable" properties. The commenter pointed out
that admitted insurers may legitimately consider high theft areas because
those risks are uninsurable according to their underwriting guidelines. This
same commenter stated that the use of statistics relating to persons with
insurance to define underserved areas, as is the use of theft losses per
policy, seems logically inconsistent. Two other commenters stated that some
companies do have underwriting guidelines that relate to the number of thefts
per policy, but criticized the Department for considering the dollar amount
of thefts rather than the number of thefts. According to the commenter, the
Department selected a factor related to severity when the companies underwriting
guidelines relate to frequency. 

Response: The Department disagrees that high theft losses per policy is
an inappropriate or logically inconsistent factor for determining underserved
areas. A neighborhood's high theft rate does not necessarily mean that 
properties
in that neighborhood are uninsurable. A key purpose of the PPP, which provides
a cafeteria-type approach to allow consumers and insurers to select from
a menu of policy forms and endorsements, is to create greater availability
of basic coverage (such as fire loss coverage) in areas such as those with
high theft losses. Accordingly, identifying such areas is crucial to the
success of the PPP. Moreover, the fact that a risk has produced high theft
losses may make the risk uninsurable and unacceptable for some companies,
but it does not make it an unacceptable risk for all insurers. Some companies
may find the risk insurable with the theft losses, or, as contemplated by
the PPP, companies may exclude theft but provide coverage for other perils.
The existence of policies with theft losses in a particular geographic area
is evidence that insurers have written coverage in that area. The Department
believes that the use of the theft loss factor based on the amount of loss
rather than frequency of claims is the best and most valid means of identifying
underserved areas for the purposes of MAP and PPP. Although most underwriting
guidelines exclude risks which have several theft claims, which is a factor
related to frequency of loss, this fact does not make the use of a 
characteristic
of high theft losses invalid as a factor for determining availability problems
in a specific area. It is the Department's assessment that insurers are 
reluctant
to sell policies that include theft coverage in an area with high theft losses,
leading to less availability to consumers in that area of all kinds of 
coverages.
This assessment is based on the fact that theft loss, both in frequency and
severity, are generally addressed in insurers underwriting guidelines, which
is an indicator that insurers take into consideration theft losses when 
determining
whether to issue policies. Through the use of this factor, the Department
has not attempted to determine if an individual risk is underserved because
of the frequency of theft losses, but rather to determine if an entire area
is underserved because of higher theft losses that may be occurring in the
area. The commenter has also confused uninsurable, in terms of an individual
insurer's underwriting guidelines with uninsurable, as intended in Articles
5.35-3 and 21.49-12. While Articles 5.35-3 and 21.49-12 both speak of 
eligibility
for the MAP and PPP in terms of insurable properties and both programs envision
the application of individual insurer underwriting guidelines, the term 
insurable
properties in the statute must mean a property that meets basic structural
standards, not a property that meets an insurer's underwriting guidelines,
as the commenter suggests. If the commenter were correct, then no consumer
turned down by insurers would be eligible because the consumer did not meet
the insurer's underwriting guidelines. Such a result would be contrary to
the intent of Articles 5.35-2 and 21.49-12, which created the PPP and MAP
to specifically encourage insurers to write policies for consumers who otherwise
could not obtain the needed insurance. 

Comment: One commenter objected to the factor relating to surplus lines
policies. The commenter stated that portions of the proposal seem to overlook
the fact that the rationale in creating the MAP and PPP was to bring insurers
together with owners of insurable properties who have been unable to reasonably
obtain insurance in their area. According to the commenter, the number of
surplus lines factor seems designed to define areas where there are a 
substantial
number of "uninsurable" properties. The commenter pointed out that admitted
insurers may legitimately decline risks written by a surplus lines carrier,
because those risks are uninsurable according to their underwriting guidelines.
Response: The Department disagrees. Because unlicensed surplus lines companies
by law can only insure risks in areas that the licensed market is not serving,
the existence of a high number of surplus lines policies is a direct measure
of insurance availability, and so is an extremely useful factor in determining
underserved areas. The Department disagrees that a risk necessarily is 
uninsurable
by the licensed market simply because a risk presently is being insured by
the unlicensed surplus lines market. A risk could be completely acceptable
under the underwriting guidelines of certain insurers, but an insured may
simply be unable to locate those insurers willing to accept new business.
While one licensed carrier might refuse under its underwriting guidelines
to insure a property covered under a surplus lines policy, another licensed
carrier may not. The purpose of the MAP is to match consumers with insurers
who are willing to write the coverage sought by the consumers. Also, a homeowner
may be able to obtain basic coverage, excluding theft, under the PPP program,
even though that homeowner would have to rely on the surplus lines market
absent the PPP program. The commenter has also confused uninsurable, in terms
of an individual insurer's underwriting guidelines with uninsurable, as intended
in Articles 5.35-3 and 21.49-12. While Articles 5.35-3 and 21.49-12 both
speak of eligibility for the MAP and PPP in terms of insurable properties
and both programs envision the application of individual insurer underwriting
guidelines, the term insurable properties in the statute must mean a property
that meets basic structural standards, not a property that meets an insurer's
underwriting guidelines, as the commenter suggests. If the commenter were
correct, then no consumer turned down by insurers would be eligible because
the consumer did not meet the insurer's underwriting guidelines. Such a result
would be contrary to the intent of Articles 5.35-2 and 21.49-12, which created
the PPP and MAP to specifically encourage insurers to write policies for
consumers who otherwise could not obtain the needed insurance. 

Comment: Four commenters objected to the consideration of the high percentage
of dwelling policies to homeowner policies as a factor in determining 
underserved
areas. Three of the commenters stated that the definition of residential
property insurance for the purposes of Articles 5.35-3 and 21.49-12 includes
dwelling policies. Thus, according to these commenters, this factor cannot
be used to determine whether residential property insurance is reasonably
available to a substantial number of owners of insurable property because
if an individual has a dwelling policy, then as a matter of law, residential
property insurance is not unavailable. All four commenters stated that a
high percentage of dwelling policies within a geographic area could merely
suggest that the area has a high percentage of rental properties and that
homeowners coverage is not necessary or appropriate for the properties in
that area. According to these commenters, an area with a high percentage
of dwelling policies could easily have a healthy "served" market. Three 
commenters
stated that because the percentage of dwelling policies factor is inappropriate
and illogical to start with, they also objected to the assignment of two
points to ZIP Codes where more than 60% of the policies are dwelling policies
when it takes only three points to be designated as a Class 1 area. 

Response: The Department disagrees. It is the Department's position that
the law grants the Commissioner the discretion to consider any factor relevant
to determining whether an area is underserved. This includes the consideration
of a factor, such as percentage of dwelling policies, that relates to lack
of availability of all the types of coverage that a consumer may want or
need. The consideration of this factor is based on the premise that a high
percentage of dwelling to homeowners policies in an area is a possible indicator
that insurers are restricting their writing of homeowners policies. A high
percentage of dwelling policies may indicate that insurers are issuing dwelling
policies even if the homeowners policy could be issued, when the coverage
amount was less than the insurer was willing to issue or the perceived risks
were such that the insurer wanted to reduce exposure by writing a less 
comprehensive
coverage. Because the dwelling policy provides limited coverage, many consumers
may consider the policy to provide less coverage than needed and those consumers
have an availability problem. However, the Department agrees with the commenters
that the usefulness of this factor is limited, and should be given less weight
than the Department originally proposed. The Department recognizes that the
use of the ratio of dwelling policies to total dwelling and homeowner policies
does not pinpoint areas where residential property insurance is wholly 
unavailable,
and agrees with the commenters that there are many reasons unrelated to 
availability
problems--such as the presence of rental properties--why an area might have
a high percentage of dwelling policies. The Department believes that a high
ratio of dwelling policies to total dwelling and homeowners policies, when
used in combination with the other factors in the Department's methodology,
is indicative of areas where residents may have problems obtaining the scope
of coverages that they want or need. The PPP is designed to specifically
target this type of unavailability problem. Because consumers purchasing
homeowner coverages generally have more choices than consumers purchasing
dwelling coverages, the increased coverage choices available through the
PPP likely will have a greater impact in areas with a high percentage of
dwelling policies. Thus, the Department believes that it is not only 
appropriate,
but essential, that the PPP target areas where there are a large number of
dwelling policies. The Department also believes that because many of the
areas assigned points for a high dwelling policy ratio number are rural,
and since rural areas are less likely to have a high concentration of rental
property than urban areas, it is unlikely that high concentrations of rental
properties is a predominant reason for the high ratios in such areas. Though
the Department believes that the rationale provided in the proposal for this
factor is correct, the Department agrees with commenters that the factor
carries too much weight in the scoring system. Therefore, the Department
has changed the rule to reflect that a geographic area will be assigned a
single point if the ratio in the area of dwelling policies to the total number
of dwelling and homeowner policies is equal to or greater than 50 percent.
Comment: Two commenters objected to the use of the family income factor
as not being relevant to insurance availability. One commenter stated that
the proposal contains no explanation for how the Department selected the
median household income amounts of $16,000 and $18,000. 

Response: The Department disagrees with the contention that median family
income is not a factor relevant to insurance availability. Insurers use 
underwriting
guidelines that relate to applicants' financial status, employment and 
residential
stability, and credit histories. Such guidelines likely will adversely affect
more consumers in areas with lower income than consumers in other areas.
Also, the Department has learned through previous analysis on automobile
insurance availability, performed in the process of determining underserved
areas for purposes of the Texas Automobile Insurance Association Plan in
sec.5.206 of this title, that there tends to be fewer insurance agents
in areas of low median income who are able to write business in standard
companies than in areas with more affluent populations. This circumstance
adversely impacts residential property insurance availability in the lower
income areas because consumers in these areas have to exert greater effort
to find an agent willing to write coverage, and even if they are able to
find such an agent, the coverage may only be available from non-rate regulated
companies at much higher rates than rates of standard companies for the same
type of risks. According to 1990 U.S. Census Bureau data, the median family
income in the state as a whole is approximately $28,000 and the median family
income in Harris, Dallas and Tarrant counties is higher than in the rest
of the state. The Department's selected factor is based on median income
levels that are substantially less than the statewide average. The Department
selected a very low median household income relative to the statewide average
to identify potentially underserved areas. According to guidelines established
by the U.S. Department of Health and Human Services, a family of four with
a 1996 income of $15,600 or less is considered to be in poverty. The selected
income levels for the factor of $16,000 and $18,000 are just slightly above
the poverty level. Because Dallas, Tarrant and Harris counties have higher
median incomes than other areas of the state, the Department's methodology
assigned one point to areas in Harris, Dallas and Tarrant counties with median
family incomes of $18,000 or less and assigned one point to other areas in
the state with median family incomes of $16,000 or less. 

Comment: Two commenters objected to the low median income factor on the
basis that it assumes a fact that is not true in that not all insurers use
low median income as an underwriting guideline; numerous insurers and some
types of insurers, such as farm mutuals and county mutuals, do not restrict
their insurance products based upon this. These two commenters also objected
to this factor because it assumes that everyone in a particular ZIP code
with a median income within the $16,000-$18,000 range are homeowners, and
thus need homeowner's insurance. While that assumption is questionable, 
according
to the commenters, if it were true, then those homeowners would likely have
mortgages and good enough credit to get a mortgage. The commenters asserted
that this assumption contradicts another assumption of the proposal-- that
families with low median incomes are more likely to be denied homeowner's
insurance because they are more likely to have bad credit. The commenters
stated that a person with a low median income could never purchase a home
in the first place without a good credit rating. Two commenters indicated
at the September 5 hearing that this factor might be a valid factor to consider.
Response: The Department disagrees that the use of the family income factor
is based on any false assumptions. Although not every insurer will utilize
identical underwriting guidelines, the Department has determined through
careful study that many insurers have guidelines relating to financial status
and employment and credit history of individuals, and that these guidelines
are significant factors in the decision whether or not to write a policy.
Many insurers rely upon the use of credit histories or credit scoring products,
such as those distributed by Fair, Isaac, as part of the underwriting process.
The Department believes that the use by insurers of credit scoring systems,
credit histories, employment stability, residential stability, and other
factors related to family or household income supports the inclusion of the
median household income factor in the adopted methodology. 

Comment: Two commenters questioned the use of the factor relating to low
median value of owner-occupied homes because it assumes that all insurers
have this type of underwriting guideline which is not true. The commenters
stated that, in addition, some insurers, such as farm mutuals and county
mutuals, actively market to low valued dwelling markets. These same two 
commenters
indicated at the September 5 hearing that this factor might be a valid factor
to consider. 

Response: The Department believes that this factor is relevant to unavailability
because many insurers use this factor as an underwriting guideline to restrict
coverage. The Department disagrees with the commenters' contention that use
of the low median home value factor assumes that all insurers use this factor
in their underwriting guidelines. The Department is neither making nor implying
such an assumption. While maintaining the confidentiality of the guidelines
as required by the Insurance Code, Article 1.24D, the Department has carefully
reviewed underwriting guidelines related to residential property insurance
in the state in formulating the factors used pursuant to these rules to gauge
insurance availability. Based on this review, which was detailed by Chief
Economist Birny Birnbaum at the September 5 hearing, the Department has 
determined
that many insurers use underwriting guidelines that restrict coverage based
on minimum coverage requirements, including low median home value, and that
these minimum coverage requirements likely will adversely affect more consumers
in areas with lower median housing values than consumers in other areas.
According to a recent Wall Street Journal report, Allstate, the state's third
largest residential property insurer in the state, in 1995, wrote approximately
500,000 residential property policies in the state, which constitutes 12%
of all such policies written in Texas in 1995, announced that it planned
to eliminate its underwriting restrictions on issuing policies on homes valued
at less than $40,000. Allstate stated that removal of this restriction would
result in sales of more policies in areas with low-valued homes. In addition,
State Farm, the state's largest residential property insurer, has entered
into a conciliation agreement with the National Fair Housing Alliance and
the Toledo Fair Housing Center and the Department of Housing and Urban 
Development
in which State Farm voluntarily agrees to eliminate minimum coverage eligibility
amounts. The Department agrees that while some insurers do specialize in
writing lower-valued homes, such specialty insurers represent a very small
percentage of the residential property insurance market, which means less
availability for these types of risks. While farm mutual insurance companies
do write lower valued homes, a farm mutual, by law, must maintain a majority
of its total insurance in force on rural property. It is unlikely that a
farm mutual company, which markets primarily in rural areas or small towns,
would provide a market to risks located in large cities or, more specifically,
in inner cities. The Department disagrees that county mutual insurance companies
actively market residential property insurance. With the exception of one
industrial fire county mutual which markets monthly-pay fire policies, the
county mutual insurers do not market residential property insurance. In 
addition,
farm mutuals provide limited coverage on unregulated policy forms at unregulated
rates, and county mutual insurers provide only dwelling policies at unregulated
rates. However, because neither type of these insurers by law can offer 
homeowners
insurance, full homeowners coverage available through the standard market
is not available through farm mutuals and county mutuals. 

Comment: Two commenters questioned the use of the factor relating to older
median age of homes because it assumes that all insurers have this type of
underwriting guideline, which is not true. The commenters stated that some
insurers, such as farm mutuals and county mutuals, actively market to low-value
dwelling markets. These same two commenters indicated at the September 5
hearing that this factor may indicate some availability problems in some
pocket areas.  

Response: The Department believes that this factor is relevant to unavailability
because many insurers use this factor as an underwriting guideline to restrict
coverage. The use of this factor as one of several criteria to determine
underserved areas does not assume that all insurers use this factor in their
underwriting guidelines. It is the Department's position, however, that many
insurers do use this factor as an underwriting restriction. This position
is based on the Department's thorough review of underwriting guidelines related
to residential property insurance in the state, which was undertaken as part
of the process to formulate factors to determine underserved areas. As a
result of this review, the Department has determined that a majority of insurers
consider the age of a dwelling in deciding whether to write a policy covering
the dwelling. Moreover, the 1994 review by the Office of Public Insurance
Counsel of insurers' underwriting guidelines for homeowners insurance stated
that 88% of such insurers have a guideline relating to age of homes. According
to a 1996 Wall Street Journal article, Allstate, the state's third largest
residential property insurer in the state, in 1995, wrote approximately 500,000
residential property policies in the state, which constitutes 12% of all
such policies written in Texas in 1995, announced that it was eliminating
its underwriting restriction that prohibited writing policies on homes older
than 40 years. Allstate stated that removal of this restriction would result
in the sale of more policies in urban areas. The Department agrees that while
some insurers specialize in writing older-age homes, such specialty insurers
represent a very small percentage of the residential property insurance market,
which means less availability for these types of risks. While farm mutual
insurance companies do write older homes, a farm mutual, by law, must maintain
a majority of its total insurance in force on rural property. It is unlikely
that a farm mutual company, which markets primarily in rural areas or small
towns, would provide a market to risks located in large cities or, more 
specifically,
in inner cities. The Department disagrees that county mutual insurance companies
actively market residential property insurance. With the exception of one
industrial fire county mutual which markets monthly-pay fire policies, the
county mutual insurers do not market residential property insurance. In 
addition,
farm mutuals provide limited coverage on unregulated policy forms at unregulated
rates, and county mutual insurers provide only dwelling policies at unregulated
rates. However, because neither type of these insurers by law can provide
homeowners insurance, full homeowners coverage available through the standard
market is not available through farm mutuals and county mutuals. c. Point
System 

Six commenters objected specifically to the use of the point system in
the methodology for determining underserved areas. 

Comment: Two of these commenters urged that the point system be eliminated
because it is totally arbitrary, and a fundamental law in rulemaking is that
rules can't be arbitrary. 

Response: The Department disagrees that the point system is arbitrary.
The Department believes that the methodology, including the point system
is fact-based and objective. While interested parties may disagree on the
assumptions and factors used, each assumption and factor is carefully defined,
described and justified. Further, the impact of each assumption can be analyzed
because the Department explained the entire methodology in detail and because
the Department provided to interested parties the data used by the Department
in developing the designations. In addition, the Department notes that some
insurers use a point system in underwriting, where the presence or absence
of certain characteristics of the consumer, vehicle or property are assigned
points and consumers above a certain point total are eligible, while consumers
below the point total are ineligible. In another example, many insurers rely
upon a credit scoring system, which awards points for various credit history
characteristics of a consumer. Some insurers rely upon the credit scoring
systems for underwriting and/or rating. The determination of whether a point
scoring system is reasonable and not arbitrary depends upon the factors used
and the relationship among the factors in the scoring system. Finally, the
Department notes that the system is for initial designations only and will
be adjusted as additional data either confirms the factors and weights or
suggests appropriate modifications. 

Comment: Two commenters stated that the proposal does not provide any support
or explanation for its varied weighting of the factors employed. One commenter
stated that there is no rationale or support as to why some factors are weighted
one point while other factors are weighted two points. 

Response: The Department disagrees. The rule explained the reason why each
factor is used and how points are applied to the factors. Each factor identifies
a characteristic of a ZIP Code which either identifies availability problems,
identifies great potential for availability problems and/or relates the specific
needs of insurers and consumers who will participate in the MAP and PPP in
accordance with the intent and structure of the MAP and PPP. The methodology
assigns one point to any ZIP code in which the specific factor is present.
In some cases, when the specific factor, by itself, indicates severe 
availability
problems or potentially severe availability problems, two points are awarded.
There are two factors where two points are possible -- surplus lines and
theft losses. In the case of surplus lines, one point is awarded when the
percentage of surplus lines policies is two to four times the state-wide
average, while two points are awarded when the percentage of surplus lines
policies is more than four times. In the case of theft losses, two points
are awarded when average theft losses are greater than twice the statewide
average for three consecutive years. In both instances, the Department provided
a rationale for the awarding of the second point -- the characteristic is
so severe that the single characteristic should indicate availability problems.
The awarding of a second point in the rule as originally proposed, relating
to the dwelling factor, has been deleted in the adopted rule. 

Comment: All six commenters stated that the Department arbitrarily disregarded
the point system through the creation of major exceptions to the point system
in order to designate some areas to a different class than the actual point
total for the areas indicated. The commenters cited examples of certain areas
that are assigned zero or one point which are designated as Class 2 underserved
areas; certain areas with two points that are geographically contiguous to
other areas with three or more points which are designated as Class 1 in
order to create a geographically contiguous areas for the PPP; and certain
areas in the City of Dallas with three or more points which are designated
as Class 2 to test for the effectiveness of the MAP alone in addressing 
availability
problems. One commenter opined that this arbitrary disregard of the point
system indicates that the system is inherently flawed. Another commenter
stated that the proposal provides no factual basis on why it was necessary
to deviate from a strict scoring system in some areas but not others. Another
commenter observed that the casting aside of the point system in certain
select instances brings into question whether there should be confidence
in the overall designation process. Another commenter stated that the method
used for determining whether a territory is a Class 1 or Class 2 underserved
territory appears to be a subjective determination that is inconsistently
applied. According to this commenter, a clear example of this problem is
the fact that no territory in Dallas is designated as a Class 1 territory,
and such an outcome does not reasonably seem possible. The commenter stated
that the standards for designating an underserved area as Class 1 or Class
2 must be some form of an objective benchmark, otherwise there can be no
clear objective trigger for the FAIR Plan. 

Response: The Department disagrees. The rule specifically explains and
justifies each departure from the results of the factor analysis and point
totals, such that any interested party could replicate the Department's results.
The Department does not agree that the departures from the results of the
point system were arbitrary, and, therefore does not agree that the methodology
is fatally flawed. The Department also disagrees that departing from the
point system results casts doubt on the point system itself. The point system
represents many, but not all, of the factors considered by the Commissioner.
For example, the MAP Executive Committee sent the Commissioner a letter on
February 1, 1996 listing a variety of factors to consider, including the
issue of geographic contiguousness. The Department believes that it is 
reasonable
to review the results of the point system to ensure that geographically-
contiguous
areas are designated, given the importance to the effectiveness of the program
of making designated underserved areas easily understood to both insurers
and consumers. The Department disagrees with the comments about the decision
to designate only Class 2 areas in the City of Dallas. While the point system
indicated that a few ZIP Codes in the City of Dallas might be designated
as Class 1 areas, it is also true that both the MAP and PPP are new programs
and establishing the opportunity to measure the effectiveness of both programs
is essential for determining how resources are best applied to addressing
the problems of insurance availability. The Department believes that it is
reasonable that one area be designated only as Class 2 to determine the 
effectiveness
of the MAP alone to address availability problems. This action is further
supported by the interest and testimony of organizations from the City of
Dallas, who will be participants in any programs to improve insurance 
availability.
The Department disagrees with the comment regarding standards for the trigger
for a FAIR Plan. The purpose of this section is not to establish triggers
or standards for triggers for a FAIR Plan. Such triggers are part of the
MAP Plan of Operation. However, it is important to point out that once the
MAP and PPP are operating, additional data will be forthcoming about the
operations of those programs which will better identify availability problems
than any data currently available. 

Comment: Three commenters criticized the Department's point system for
failure to employ a weighting system to take differential geographic impact
into account. One of these commenters stated that the proposal asserts that
the various factors have differential geographic impact, and that this in
fact appears to be a central assumption on which the proposal is based. The
commenter stated that if this is the case, the commenter would expect the
Department to use a methodology that employed derived weights to adjust for
the influence of each of the various factors (rather than an arbitrarily
applied system of weights that is the same for each geographic area) which
would likely produce a more meaningful total score. However, according to
the commenter, no scoring system can objectively determine what is inherently
a subjective determination. 

Response: The Department disagrees, particularly with the comments that
no scoring system can objectively determine what is inherently a subjective
determination. The fact that a particular determination requires judgment
and decisions among competing alternatives does not mean that the determination
is subjective and arbitrary. The Department's scoring system is objective
in that it is fact-based, identifies all assumptions and relationships and
allows any interested party to replicate the results. The Department does
not understand the comment on the use of "derived weights to adjust for the
influence of each of the various factors," and the commenter does not explain
what is meant by "derived weights" nor what is meant by the "adjusting for
the influence". The scoring system identifies factors which have a different
geographic impact depending upon the characteristics of the geographic area.
The methodology sets threshold values, above or below which the ZIP Code
is determined to have availability problems, great potential for availability
problems or a characteristic particularly relevant to the intent and operation
of the programs, and awards points accordingly. By awarding points on this
basis, it is the Department's position that it has given appropriate weight
to a particular factor according to the characteristics of the particular
geographic area. 

Comment: Two commenters criticized the proposal for failing to provide
a factual basis to determine what area is geographically isolated. 

Response: The Department disagrees. Under the proposed rule a geographically
isolated area is an area with two points that is not contiguous with other
ZIP Codes of two or more points. The adopted section expands the definition
of a geographically isolated area to include ZIP Codes with two or more points
that are not contiguous with ZIP Codes of two or more points. 

Comment: One commenter suggested the alternatives that either less weight
be given to the factors or that the number of points for characterization
of an underserved area be raised due to the lack of a demonstrable nexus
between these factors. 

Response: The Department disagrees. The Department determined the assignment
of points on the basis that the factors were generally of equal value in
any analysis of residential property insurance availability problems. Higher
points were assigned to those factors determined to be indicative of greater
severity of availability. In contrast, and in response to specific comments,
the Department gave less weight to percentage dwelling to total policies
factor in the adopted section than as originally proposed. Finally, the 
Department
disagrees that a "nexus" has not been demonstrated between the factors and
insurance availability. The rationale and basis for each factor is identified
and explained. Each factor either identifies availability problems, identifies
a great potential for availability problems or identifies specific 
characteristics
of a geographic area which are directly related to the structure and intent
of the MAP and PPP and to the needs of insurers and consumers participating
in the programs. 

4. Subsection (f)--Changes in Class 1 and Class
2 Designations

Comment: Four commenters recommended deleting the requirement in subsection
(f) that after initial designation of an area as a Class 1 underserved area,
the Class 1 designation may not be withdrawn for three years. Three commenters
recommended that this provision be amended to provide that any changes in
Class 1 designations may be adopted at any time by amending the rule pursuant
to the Government Code, sec.sec.2001.004-2001.038 (Administrative Procedure
Act). One commenter suggested that the proposal be changed to provide that
Class 1 area designations may not be withdrawn for one year. The commenters
noted that the statute does not impose such a three-year requirement and
recommended that the proposal be changed to allow the Commissioner to take
prompt and quick action in making changes in Class 1 designations. 

Response: The Department agrees with deleting the requirement in subsection
(f) that after initial designation of an area as a Class 1 underserved area
the Class 1 designation may not be withdrawn for three years and has changed
the rule accordingly.

5. Subsection (g)--Quarterly Report 

Comment: Three commenters disagreed with the inclusion of company specific
data in the quarterly report provided in subsection (g) of the proposal.
One commenter stated that the provision of this quarterly report data will
provide valuable information to the commenter's competitors, with no 
corresponding
benefit to the public. According to this commenter, competitors can determine
the ZIP Codes where the commenter does business, and then can begin to 
aggressively
target marketing those areas to take business away. According to the commenter,
there appears to be virtually no relationship between making such information
part of the public record and the goal of making residential property insurance
reasonably available to a substantial number of owners of insurable property.
The other commenter stated that the quarterly reporting requirement has nothing
to do with designating underserved areas and is an attempt to require public
disclosure of ZIP code specific premium and loss information reported under
the statistical plans which is confidential trade secret information and
disclosure of such information would be in violation of the Open Records
Act. Both commenters stated that this provision exceeds the rulemaking authority
provided in Articles 5.35-3 and 21.49-12. 

Response: The Department disagrees. The commenter's objections are based
on an incorrect reading of this subsection of the rule. The commenters are
reading this subsection (g) to provide for the release of company-specific
premium and loss data by ZIP code. No company-specific premium and loss data
is authorized for release in this subsection, and no company-specific premium
and loss data will be provided pursuant to this subsection. The information
to be provided is the number of residential property insurance policies in
force by type of policy by company by ZIP code or the number of residential
property insurance policies written by type of policy by company by ZIP code.
This type of information is identical to the kind of information that is
released by the Department for underserved areas for purposes of the Texas
Automobile Insurance Plan Association pursuant to 28 TAC sec.5.206. The
Department disagrees that the release of the type of information authorized
under this rule will allow competitors to understand or to identify a particular
company's marketing strategy for several reasons. First, the data in the
report will be historical data, representing experience and activity from
several months to several years old. Second, much more current and timely
information on market strategies is available to competitors in the marketplace.
Insurers rely heavily upon feedback from agents to find out which companies
are non-renewing and which are writing. Third, some companies routinely issue
press releases to announce major changes in marketing policy. Fourth, the
Department is aware that insurers are generally aware of other insurer's
underwriting guidelines, which represent the implementation of insurer marketing
strategy. Because the information to be released does not include company-
specific
premium and loss data, there is no violation of the Open Records Act and
no disclosure of trade secret information. It is the Department's position
that the release of the information is vital for two compelling reasons:
(i) This information is necessary and in the public interest to enable insurers
and the public to track the effectiveness of the PPP and the MAP. (ii) Public
availability of this data allows insurers and other interested parties to
verify the data and credits against TCPIA loss assessments. Insurers have
an interest in monitoring possible increases in their assessment obligations
because of other insurers writing of PPP policies pursuant to Article 5.35-3.
The Department has statutory authority to adopt this subsection of the rule.
The Commissioner has the authority to adopt the subsection for purposes of
the MAP pursuant to Article 21.49-12, sec.8, which grants the Commissioner
the authority to promulgate rules in addition to the MAP plan of operation
that are necessary to accomplish the purposes of the MAP. The Commissioner
has the authority to adopt the subsection for purposes of the PPP pursuant
to Articles 5.35-3 and 1.03A. Article 5.35-3 authorizes the Commissioner
by rule to determine and designate underserved areas for residential property
insurance; Article 1.03A authorizes the Commissioner to adopt rules and 
regulations
for the conduct and execution of duties and functions of the Department which
are authorized by statute. 

6. Public Policy Grounds

Four commenters objected to the adoption of the proposal on public policy
grounds. 

Comment: Two commenters stated that the statutory standards in Articles
5.35-3 and 21.49-12 are the same as the statutory standards for designating
areas in the Texas Catastrophe Property Insurance Association (TCPIA) and
the FAIR Plan and questioned why, if the legal basis used for designating
underserved areas is sound in the proposal, isn't this same approach sound
for the TCPIA and the FAIR Plan? The commenters expressed concern that the
application of the methodology used in this rule to the TCPIA would lead
to rapid expansion of the catastrophe areas which would be harmful to companies
who are assessed for losses in the event of a catastrophe. 

Response: The Department disagrees that the statutory standards in Articles
5.35-3 and 21.49-12 are the same as in Articles 21.49A and 21.49. Articles
5.35-3 and 21.49-12 require the Commissioner to consider whether residential
property insurance is not reasonably available to a substantial number of
owners of insurable property in the underserved area and any other relevant
factors as determined by the Commissioner. Article 21.49A provides that if
the Commissioner determines, after a public hearing, that in all or any part
of the state residential property insurance is not reasonably available in
the voluntary market to a substantial number of insurable risks and that
at least 50% of the applicants to the residential property market assistance
program who are qualified under the plan of operation have not been placed
with an insurer in the previous 12-month period, the Commissioner may establish
a FAIR Plan to deliver residential property insurance to citizens of this
state in underserved areas, which shall be determined and designated by the
Commissioner by rule. Under Article 21.49A, the Commissioner is required
to consider a factor in designating underserved areas that is not required
in Articles 5.35-3 and 21.49-12--that at least 50% of the applicants to the
residential property market assistance program who are qualified under the
plan of operation have not been placed with an insurer in the previous 12-month
period. It is the Department's position that the Commissioner would have
to consider this factor in determining which areas are underserved for purposes
of the FAIR Plan. The Department, however, agrees that because some of the
same factors which are indicative of underserved areas for purposes of the
MAP may also be indicative of underserved areas for purposes of the FAIR
Plan, it may be appropriate and necessary to use these factors as part of
the methodology for designating underserved areas for the FAIR Plan. But
such a determination under Article 21.49A would be the result of a separate
determination process and would most likely include the consideration of
other factors not included in the methodology for determining underserved
areas in this rule. Article 21.49 requires that areas may be designated as
catastrophe areas eligible for coverage through the TCPIA if the Commissioner
determines, after notice and hearing, that windstorm and hail insurance is
not reasonably available to a substantial number of owners of insurable property
within an area located within a city or county that is subject to unusually
frequent and severe damage resulting from windstorms and/or hailstorms. Thus,
designation of catastrophe areas eligible for the TCPIA relates to the exposure
for catastrophic loss due to hurricanes striking the Texas coast. The criteria
for determining availability of residential property insurance for dwelling
and liability coverage is not the same as determining availability of windstorm
and hail insurance in coastal areas. An insurer's willingness to write wind
and hail insurance along the Texas coast relates to the construction of the
risk, the location of the risks in relation to the exposure of a large body
of open water, the availability of catastrophic reinsurance, the concentration
of exposure subject to a major catastrophic loss in given areas of the coast
for an individual insurer, and the concentration of an individual insurer's
exposure along the Texas coast in relation to its exposure in other catastrophic
areas of the United States. Clearly, the legislature recognized the difference
between general residential property insurance availability problems throughout
the state and availability problems along the Texas coast because Article
21.49-12 specifically prohibits the use of the MAP as a means to address
the wind and hail availability problems for risks located in a designated
catastrophe area. Further, in enacting Article 21.49, which created the TCPIA,
the legislature initially identified areas with wind and hail problems --
the counties in Tiers 1 and 2. The legislature made no such designations
in Articles 5.35-3 or 21.49-12, but instead left such designations completely
to the discretion of the Commissioner. The Department understands insurer
concerns about the expansion of areas designated for TCPIA coverage, but
the Department does not believe that the use of the factors to designate
underserved areas for purposes of the MAP requires the use of these factors
for the TCPIA. The two programs are separate and distinct programs with 
different
purposes, different goals, and different means of operating; the MAP is purely
voluntary participation by insurers while the TCPIA is mandatory participation.
For these reasons, the Department does not believe that it makes sense to
suggest that the same factors used to determine underserved areas for the
MAP should, would, or must be used to designate catastrophe areas for the
TCPIA. The Department believes that it is inappropriate to measure the 
reasonableness
of the adopted methodology for designating underserved areas for purposes
of Articles 5.35-3 and 21.49-12 against the possible results of applying
such a methodology in another context. 

Comment: Another commenter stated that adoption of the proposal could result
in misuse of incentives for voluntary participation in the program, such
as "cherry picking" among, what the commenter believes to be, the too-large
Class 1 areas for the purposes of lessening premium tax and TCPIA assessments.
The commenter stated that the unreasonably large areas and populations 
designated
as Class 1 may perversely encourage the misuse of MAP in a way which will
undermine the safety afforded by the TCPIA reserves. Thus, according to the
commenter, the proposal is particularly destructive of a sound public policy
relating to the larger insurance market. 

Response: The Department disagrees. The Department does not believe that
the proposed designations nor the adopted designations are destructive of
a sound public policy relating to the larger insurance market for the following
reasons: (i) Insurers are not eligible for premium tax credits or TCPIA 
assessment
incentives under the MAP (Article 21.49-12). Because no credits against TCPIA
assessments are associated with MAP activity, the size of MAP activity will
not affect TCPIA assessments. (ii) The amount of premium written in areas
designated as Class 1 is small, both in relation to total statewide premium
and to the voluntary premium which is the basis for TCPIA assessments. If
the commenter intended the concerns to apply to the PPP, the Department has
reduced the Class 1 areas from 259 ZIP codes in the proposal to 165 ZIP codes
in the adopted rule; the premium volume represented by the Class 1 areas
is reduced from $117 million in the proposal to $89 million in the adopted
rule. Thus the Department has not designated as broad a Class 1 area as 
proposed.
Nevertheless, it is the Department's position that although there is always
a potential for misuse of incentives provided to insurers by the Legislature,
it is unreasonable to assume that the existence of incentives, regardless
of the size of an area to which the incentive may apply, automatically indicates
a misuse will occur. The legislature clearly intended that insurers writing
PPP policies in designated underserved areas receive premium tax credits.
The legislature could have placed a cap on the size of the underserved areas
or on the amount of premium tax credit which would be allowed, but did not
choose to do so. The sole purpose of the premium tax credits is to encourage
insurers to write residential property insurance in an underserved area 
regardless
of the size of the underserved area. If the implementation of the PPP results
in the misuse of the statutory incentives, the Department is confident that
the Legislature will take steps to stop the abuse. In addition, while the
commenter may believe an insurer will "cherry pick" designated areas, there
is no evidence to support this assertion. (iii) The Department disagrees
that the scope of the areas and populations designated as Class 1 underserved
areas in the rule may encourage the misuse of the MAP in a way which will
undermine the stability of the TCPIA. The operating expenses and claims paid
by the TCPIA are from annual premiums collected for policies written and
from assessments to member insurers. The incentive provided by the legislature
to insurers writing in Class 1 designated underserved areas produces a reduction
in the net direct premiums used to determine an individual member insurer's
percentage of participation in the TCPIA. The Department disagrees that the
operation of the MAP, no matter how large or small the areas of eligibility,
will adversely affect the financial stability, reserves or operation of the
TCPIA. As stated previously, no credits against TCPIA assessments are associated
with MAP activity, so the size of MAP activity will not affect TCPIA 
assessments.
Moreover, the effect of the incentive on the TCPIA is to simply produce a
redistribution of the participation by member insurers. Indeed, if all insurers
participated in the writing of risks in Class 1 underserved areas to the
same degree as their writing of other business, there would be no change
to any insurer's participation in the TCPIA. Although one insurer could 
theoretically
obtain a relative benefit from PPP activity by writing a large amount of
PPP policies while all other insurers do not, this same opportunity is already
available to any insurer because insurers gain credits against the TCPIA
assessment for voluntary writings in the TCPIA area. Thus, the existence
of the PPP does not alter the basic structure of the TCPIA, nor does the
PPP change the fact that the stability of the TCPIA is essentially dependent
on the overall stability of the insurance marketplace. This incentive may
help an individual insurer, but it in no way undermines the effectiveness
of the TCPIA or places the TCPIA in a position of being unable to function
as intended by the legislature.  

Comment: One commenter stated that the proposal could significantly reduce
the likelihood of successfully addressing genuine insurance availability
problems in inner city neighborhoods which may need a market assistance plan.
When so many are considered "underserved", the truly underserved will be
unlikely to benefit from the efforts of industry or the Department. Instead,
according to the commenter, this unfocused proposed solution will beget a
cynicism that will encourage gaming of the market assistance plan by consumers,
agents, and insurers alike. The commenter stated that it is the commenter's
view that the primary thrust of the enabling legislation was intended to
address perceived inner-city availability problems in urban areas. According
to the commenter, a more targeted program at the outset will enhance the
effectiveness of the program for those most urgently in need of assistance.
Response: The Department has modified the rule as proposed to designate
fewer ZIP codes covering less geographic area. The areas designated as Class
1 underserved areas include the inner city areas of the major cities (Houston,
Dallas, Fort Worth, San Antonio, and Austin). Insurers are provided incentives
under the PPP program for writing in Class 1 areas. Accordingly, nothing
in the non-inner city designations should inhibit insurers from issuing 
insurance
policies on eligible insurable property in the inner city areas. Also, if
the designated underserved areas do not have availability problems, there
will not be any MAP applicants in those areas, and hence no need for insurers
to focus efforts in those areas. It is the Department's position that the
legislature in enacting Articles 5.35-3 and 21.49-12 intended to provide
a mechanism to address availability problems wherever those problems exist
in the State of Texas, and not just in inner city urban areas. Based on the
Department's analysis as set forth in the rule, the Department has determined
that areas other than urban areas, such as rural and coastal areas also face
availability problems and should be allowed to benefit from the two programs.
The MAP Executive Committee recognized the need to address availability problems
in both urban and rural areas of Texas, specifically indicating in the plan
of operation that the purpose of the MAP is to provide assistance to both
urban and rural areas in Texas where availability problems exist. 

Comment: Two commenters expressed concern that starting a program this
big could be a precursor for a mandatory MAP or FAIR Plan. One commenter
stated that concern based on two reasons: (i) the more territories that are
designated for MAP now, the more opportunity there is for a FAIR Plan to
be designated, and (ii) the subjectivity of the methodology, such as designating
all of Tarrant County when not all areas met the ratios test. 

Response: The Department disagrees with the contention that the larger
the designated underserved area, the greater the likelihood of implementation
of a mandatory MAP or FAIR Plan. The Department believes the size of the
designation is not related to the likelihood of movement to a mandatory MAP
or FAIR Plan. If an area is underserved and there is demand for MAP services,
it is the response of insurers to those MAP applications that will determine
whether a mandatory MAP or FAIR Plan is needed. Indeed, if areas that, in
fact, are adequately served, are incorrectly designated as underserved for
MAP, then the Department would expect no demand for MAP services, because
a consumer is not eligible for MAP services without two rejections for 
insurance.
However, even assuming, and the Department does not agree with the assumption,
that size of designated area is related to the likelihood of moving to mandatory
MAP or FAIR Plan, logic would indicate the opposite conclusion from the concerns
of the commenter. A smaller designation would likely target the most severely
underserved areas -- the areas with the most structures insurers are not
inclined to write. A larger designation would include all the most severely
underserved areas plus areas underserved to a lesser degree. It is reasonable
to expect that more insurers would be willing to write policies in the less-
than-most-severely-
underserved areas than in the most-severely-underserved areas, thereby resulting
in a greater percentage of MAP applications being written by participating
insurers. This would have the effect of improving the effectiveness of MAP,
measured as the percentage of policies issued to total eligible MAP 
applications,
and making it less likely that the mandatory MAP or FAIR Plan will be needed.
The Department disagrees that the methodology employed to designate underserved
area is subjective. The rule describes in clear and precise terms exactly
what factors were used and how those factors were considered. By using the
factors and methodology specified in the rule, any interested person can
replicate the results of the analysis. Thus, the methodology and assumptions
employed by the Commissioner are very clear. Moreover, the Department made
available to any interested person at the time of publication of the proposed
rule the spreadsheet analysis supporting the proposed designations. In 
combination
with the detailed explanation in the proposed rule, any interested person
could identify and evaluate any and all assumptions and relationships in
the original analysis. The Department specifically provided this information
to allow interested parties to replicate the staff analysis and to modify
the staff analysis based upon different assumptions. The strength of the
process and the methodology is demonstrated by the Commissioner's acceptance
of the argument that too much weight was given to the dwelling policy percentage
factor. The methodology allowed the Commissioner to give less weight to this
factor, while retaining the other factors. While commenters may disagree
with certain of the Department's assumptions, factors or methodology, the
Department disagrees that any of the methodology is subjective in the sense
of being arbitrary. The Department has explained and justified each assumption,
each factor and each part of the methodology used to designate underserved
areas.  

7. Appointment of Working Group

Comment: Three commenters stated that the proposal was so flawed that it
should be withdrawn and reworked. Four other commenters proposed substantial
revision of the proposal with two of these proposing an alternative rule.
Six of these seven commenters requested that an advisory group be appointed
to work with staff to develop a new proposal. Two commenters recommended
that the advisory group be appointed as part of the rule to aid in monitoring
underserved areas. Three of the commenters offered to participate in or work
with such an advisory group. 

Response: The Department disagrees that the rule is so flawed that it should
be withdrawn and reworked. It is the Department's position that it has made
appropriate changes to the proposal to address the major concerns of the
commenters. The MAP plan of operation, which was adopted pursuant to 
Commissioner's
Order Number 96-0987 (August 28, 1997), specifies the procedures and methods
of operation of the MAP. This plan of operation provides for the appointment
of a subcommittee on data collection with responsibilities for (i) assisting
in determining criteria for designating underserved areas, (ii) ongoing review
and monitoring of underserved areas, and (iii) identifying and presenting
recommendations to the MAP Executive Committee for consideration. The MAP
Executive Committee will then present recommendations to the Commissioner
for possible action. It is the Department's position that this subcommittee
and the MAP Executive Committee, which are composed of consumer, agent, and
insurer representatives, are the appropriate bodies to monitor and review
the designated underserved areas and to present recommendations for any changes
in these designations. Pursuant to the Administrative Procedure Act (Government
Code, sec.2001.021) any interested person may petition the Department for
changes in the underserved area designations.  

8. Phased Implementation

Comment: Three commenters suggested that the Department phase in implementation
of the MAP and PPP. One commenter suggested that the Department first implement
the programs only in Class 1 areas. The Department disagrees. The Department
believes there is a substantial difference in the structure, operation and
targeted availability problem of the MAP and PPP. As such, it would be 
inappropriate
to limit even the initial designations to only areas which are eligible for
PPP and MAP. This proposal is particularly flawed because of the very limited
areas designated as Class 1. The commenter stated that insurers will have
difficulty managing resources to cover 22% of the state all at once. Limiting
the initial implementation to Class 1 areas only would make the programs
more manageable from a company's standpoint and would allow the Department
and insurers to obtain experience with the program before expanding it. .
The Department agrees with this comment to the extent that some insurers
may have difficulty applying adequate resources at one time for all designated
underserved areas for both PPP and MAP. In response to this comment, the
Department has added a phase-in provision to the designations. Phase 1 targets
the city of Dallas, Tarrant County, the city of San Antonio, the city of
Houston and the southernmost area of Texas. Phase 2 targets the city of El
Paso, the city of Austin, the sea coast area, the county of Newton and the
north-central area of Texas. Phase 3 includes the remaining designated 
underserved
areas -- portions of south Texas, northeast Texas and central Texas. This
commenter also suggested that the Department designate some areas as Class
3, which would be studied to determine whether or not the areas are underserved,
and whether the methodology proposed by these rules accurately detects 
underserved
areas. The Department disagrees. The commenter did not explain how Class
3 designation would differ from Class 1 or Class 2 designation. However,
the Department does not believe it is reasonable to designate an areas as
underserved, allow consumers to go through the process of purchasing a PPP
policy or filing a MAP application and then telling the consumer that they
cannot participate in the program -- but their interest will be noted. Another
commenter recommended that the Department first implement a pilot project
to begin the MAP process in one significant underserved area. The commenter
stated that such a pilot program would help insurers, agents, consumers and
the Department identify and correct possible problems in the MAP before the
program is used statewide, and thus improve the likelihood that the entire
program will succeed. The Department disagrees that a pilot program is necessary
or desirable. Because of the phase-in of designated underserved areas, the
Department, insurers, agents, consumers and other interested parties will
be able to identify and correct possible problems in the MAP in a timely
fashion. Moreover, the MAP Exectutive Committee is committed to careful 
monitoring
of the MAP program and, with the Commissioner, will take timely actions as
necessary to correct any problems with the program. Thus, mechanisms are
in place to address the concerns which the commenter suggests should be 
addressed
through a pilot program. The third commenter suggested that the Department
first implement the programs only in inner-city areas, where the perception
of unavailability of coverage is the highest. The commenter suggested that
such a phased-in approach would likely enhance voluntary participation by
insurers, particularly if the Department based later expansion on more objective
criteria than contained in the present proposal. The Department disagrees.
The Department finds nothing in the statutory authority to designate areas
as underserved for PPP and MAP to indicate that the legislature intended
only inner-city urban areas receive such designation. The Department believes
that criteria used to determine whether an area is underserved or potentially
underserved are appropriately applied to all areas in Texas -- rural and
urban. The Department agrees that a phase-in designation may encourage more
insurers to more effectively participate in the PPP and MAP and has modified
the proposed rule accordingly. The Department disagrees that a phased-in
designation is related to later expansion and/or other criteria used in the
future to designate underserved areas for the purposes of PPP and MAP. 
Response: The Department agrees that a phased in implementation of the
MAP and PPP is desirable, so that insurers can avoid the potential difficulty
of applying resources to all designated areas at one time. Accordingly, the
Department has added a phase-in provision to the designations. Phase 1 targets
the City of Dallas, Tarrant County, the City of San Antonio, the City of
Houston and the southernmost area of Texas. Phase 2 targets the City of El
Paso, the City of Austin, the sea coast area, the county of Newton and the
north-central area of Texas. Phase 3 includes the remaining designated 
underserved
areas -- portions of south Texas, northeast Texas and central Texas. The
Department disagrees that all Class 1 designations should be implemented
before any Class 2 designations. The Department believes there is a substantial
difference between MAP and PPP in the structure, operation and targeted 
availability
problem addressed by the two programs. As such, it would be inappropriate
to limit even the initial designations to only areas which are eligible for
PPP and MAP. The commenter's proposal also does not take into account the
logistics in training the same agent force to participate in both the MAP
and PPP. Based on these logistics, the Department believes it is more logical
to divide the state into regions which implement both programs at one time.
The Department disagrees that it should add the Class 3 designation proposed
by one of the commenters because the Department believes that the best means
of addressing commenters' concerns about the areas as proposed is to phase
in the Class 1 and Class 2 areas. However, the Department understands that
the commenter wants the Department to implement the MAP and PPP in certain
areas to test the accuracy of the Department's methodology, but to not include
these "test" areas in the quarterly report required by subsection (g) of
the adopted rules. The Department does not believe that this extra class
of designation is necessary because the designations of underserved areas
in the adopted rule will adequately measure the accuracy of the Department's
methodology. If consumers in an area designated under the adopted rule do
not apply in significant numbers to the MAP or PPP, the adopted rule allows
the Commissioner to analyze that data, and, if appropriate, drop the area
from the designated ZIP Codes. The Department also disagrees that a pilot
program for the MAP is necessary or desirable. Because of the phase-in of
designated underserved areas, the Department, insurers, agents, consumers
and other interested parties will be afforded time to identify and correct
possible problems in the MAP. Moreover, the MAP Executive Committee is committed
to careful monitoring of the MAP program and, with the Commissioner, will
take timely actions as necessary to correct any problems with the program.
Thus, mechanisms are in place to address the concerns which the commenter
suggests should be addressed through a pilot program. The Department also
disagrees that it should first implement the MAP and PPP only in the inner
cities. The Department finds nothing in the statutory authority to designate
areas as underserved for PPP and MAP to indicate that the legislature intended
that only inner-city urban areas receive such designation. The Department
believes that criteria used to determine whether an area is underserved or
potentially underserved are appropriately applied to all areas in Texas --
rural and urban. However, the Department agrees generally that a phase-in
of the programs may encourage more insurers to more effectively participate
in the PPP and MAP, and, as previously described, the Department has modified
the rule accordingly. The Department disagrees that a phased-in designation
is related to later expansion and/or other criteria used in the future to
designate underserved areas for the purposes of PPP and MAP. As explained
in response to other comments, the Department disagrees that the methodology
employed under the rules is arbitrary or subjective.  

The new section is adopted pursuant to the Insurance Code, Articles
5.35-3, 21.49-12 and 1.03A, and the Government Code sec.sec.2001.004-2001.038.
Article 5.35-3, sec.1(a) provides that by rule the Commissioner may determine
and designate areas as underserved areas for residential property insurance.
It further provides that in determining which areas will be designated as
underserved, the Commissioner shall consider whether residential property
insurance is not reasonably available to a substantial number of owners of
insurable property in the underserved area and any other relevant factors
as determined by the Commissioner. Article 21.49-12, sec.1(a) requires
the Commissioner to establish a voluntary market assistance program to assist
Texas consumers in obtaining residential property insurance coverage in 
underserved
areas, which shall be determined and designated by the Commissioner by rule
using the standards specified in Article 5.35-3, sec.1 of the Insurance
Code. Article 1.03A authorizes the Commissioner of Insurance to adopt rules
and regulations, which must be for general and uniform application, for the
conduct and execution of the duties and functions of the Texas Department
of Insurance only as authorized by a statute. The Government Code 
sec.sec.2001.004-2001.038
(Administrative Procedure Act) authorize and require each state agency to
adopt rules of practice stating the nature and requirements of available
formal and informal procedures and prescribe the procedures for adoption
of rules by a state agency. The following statutes are affected by this
adoption: Articles 5.35-3 and 21.49-12. sec.5.3700. Designation of Underserved
Areas for Residential Property Insurance For Purposes of the Insurance Code,
Articles 5.35-3 and 21.49-12 

sec.5.3700. Designation of Underserved Areas for
Residential Property Insurance For Purposes of the Insurance Code, Articles
5.35-3 and 21.49-12. 
(a) Purpose and scope. The purpose of this section is to: 
(1) designate the areas determined by the Commissioner of Insurance
to be underserved areas for purposes of residential property insurance pursuant
to the Insurance Code, Article 5.35-3 (Property Protection Program for 
Underserved
Areas); 

(2) designate the areas determined by the Commissioner
of Insurance to be underserved areas for purposes of residential property
insurance pursuant to the Insurance Code, Article 21.49-12 (Market Assistance
Program); and 

(3) identify the factors and methodology used in determining
such underserved areas. 

(b) Definitions. The following words and terms when used in
this section shall have the following meanings unless the context clearly
indicates otherwise. 

(1) Class 1 underserved area--An area determined and designated
in this section as an underserved area by the Commissioner of Insurance for
purposes of both the Property Protection Program operated pursuant to the
Insurance Code, Article 5.35-3, and the Residential Property Insurance Market
Assistance Program operated pursuant to the Insurance Code, Article 21.49-12.
Policy forms and types of coverage that insurers may write in these areas
are specified in subsections (b)(1) and (d)(2) of sec.5.10004 (MAP Policy
Forms and Types of Coverage) of this title. 

(2) Class 2 underserved area-- An area determined and
designated in this section as an underserved area by the Commissioner of
Insurance for purposes of the Residential Property Insurance Market Assistance
Program operated pursuant to the Insurance Code, Article 21.49-12. Policy
forms and types of coverage that insurers may write in these areas are specified
in subsections (b)(2) and (d)(3) of sec.5.10004 (MAP Policy Forms and Types
of Coverage) of this title. 

(3) Commissioner--Commissioner of Insurance of the State
of Texas. 

(4) Department--Texas Department of Insurance. 

(5) Market Assistance Program--The residential property
insurance market assistance program operated pursuant to Article 21.49-12
of the Insurance Code and sec.sec.5.10001-5.100015 (Plan of Operation)
of this title. 

(6) Property Protection Program--The residential property
insurance program for underserved areas operated pursuant to Article 5.35-3
of the Insurance Code. 

(c) Class 1 underserved areas. 

(1) The following areas are designated as Class 1 underserved
areas, effective October 15, 1996: 

Figure 1: 28 TAC sec.5.3700(c)(1)

(2) The following areas are designated as Class 1 underserved
areas, effective January 15, 1997: 

Figure 2: 28 TAC sec.5.3700(c)(2)

(3) The following areas are designated as Class 1 underserved
areas, effective April 15, 1997:

Figure 3: 28 TAC sec.5.3700(c)(3) 

(d) Class 2 underserved areas. 

(1) The following areas are designated as Class 2 underserved
areas, effective October 15, 1996:

Figure 4: 28 TAC sec.5.3700(d)(1)

(2) The following areas are designated as Class 2 underserved
areas, effective January 15, 1997:

Figure 5: 28 TAC sec.5.3700(d)(2) 

(3) The following areas are designated as Class 2 underserved
areas, effective April 15, 1997:

Figure 6: 28 TAC sec.5.3700(d)(3)

(e) Factors considered in designating Class 1 and Class 2 underserved
areas. In determining the areas designated as underserved, the Commissioner
shall consider whether residential property insurance is not reasonably 
available
to a substantial number of owners of insurable property in a specific geographic
area and any other relevant factors as determined by the Commissioner. The
determination of the areas to be designated as underserved is based on the
factors and methodology outlined in this subsection. 

(1) There is no single comprehensive measure of whether residential
property insurance is or is not reasonably available or is or is not potentially
reasonably available to a substantial number of owners of insurable property
either on a statewide basis or in any particular area of the state. Therefore,
the Commissioner has identified characteristics of particular geographic
areas which are likely to be associated with greater difficulty by consumers
in obtaining residential property insurance. These characteristics were 
considered
in addition to direct measures of residential property insurance availability
(including the number of surplus lines policies as specified in paragraph
(3)(F) of this subsection).. 

(2) The Commissioner considered underwriting restrictions
and requirements of insurers writing residential property insurance in Texas
that would limit availability of residential property insurance coverages
to a greater extent in some geographic areas than in others. Underwriting
guidelines are the rules used by insurers to determine whether or not to
sell an insurance policy to a particular consumer and what, if any, restrictions
will be placed on the policy issued. Many underwriting guidelines have a
differential geographic impact. These guidelines include weather-related
loss exposure, type of dwelling, age of dwelling, minimum dwelling value,
financial stability of consumers, employment status of consumers, length
of continuous employment, occupation, and length of continuous residency. 
(3) Based upon the review of insurer underwriting guidelines
and the Commissioner's authorization under Article 5.35-3 and the Commissioner's
mandate under Article 21.49-12 to establish programs to increase the 
availability
of residential property insurance in designated underserved areas as well
as the structure and methods of operation of the two programs, specific factors
for analysis by ZIP Code area or county were developed, and points were assigned
to each of the factors. If the factor for a specific ZIP Code indicated actual
or potential difficulty for consumers in obtaining residential property 
insurance,
the ZIP Code was assigned one point. If the factor for a specific ZIP Code
indicated especially significant actual or potential difficulty for consumers
in obtaining residential property insurance, the ZIP Code was assigned two
points. ZIP Codes not receiving one or two points received zero points for
the specific factor. The specific factors and the points assigned are as
follows: 

(A) Low median household income. Underwriting guidelines related
to financial, employment and residential stability and credit histories will
likely affect consumers in areas with lower-income to a greater extent than
consumers in other areas. Therefore, ZIP Codes with median household incomes
of $16,000 or less are assigned one point, except that because of higher
median incomes in Harris, Dallas, and Tarrant Counties, ZIP Codes in these
counties with median household incomes of $18,000 or less are assigned one
point. 

(B) Low median value of owner-occupied homes. Underwriting
guidelines relating to minimum coverage requirements will likely affect 
consumers
in areas with lower median housing values to a greater extent than consumers
in other areas. ZIP Codes with median value of owner-occupied dwellings of
$30,000 or less are assigned one point, except that because of higher 
underwriting
standards in Harris, Dallas, Tarrant, and Travis counties, ZIP Codes in these
counties with median values of owner-occupied dwellings of $40,000 or less
are assigned one point. 

(C) Older median age of homes. Underwriting guidelines relating
to age of dwelling will likely affect consumers in areas with older median
housing age to a greater extent than consumers in other areas. ZIP Codes
with a median year built of 1957 or earlier are assigned one point. 

(D) High percentage of dwelling to homeowners policies. The
consideration of this factor is based on the premise that a high percentage
of dwelling to homeowners policies in an area is a possible indicator that
insurers are restricting their writing of homeowners policies. A high percentage
of dwelling policies may indicate that insurers are issuing dwelling policies
even if the homeowners policy could be issued, when the coverage amount was
less than the insurer was willing to issue or the perceived risks were such
that the insurer wanted to reduce exposure by writing a less comprehensive
coverage. Also, because consumers purchasing homeowners coverages generally
have more choices than consumers purchasing dwelling coverages, the increased
coverage choices available through the Property Protection Program will likely
have a greater impact in areas with higher percentages of dwelling policies
to total policies. Because the statewide percentage of dwelling policies
to total dwelling plus homeowners policies is about 20%, ZIP Codes with 
percentages
of dwelling policies to total dwelling plus homeowners policies of more than
50% are assigned one point. 

(E) High theft losses per policy. The consideration of this
factor is based on the premise that because of insurers' perception of high
theft losses in certain areas, insurers are reluctant to sell policies which
include theft coverage. Consumers in high theft areas, therefore, have less
availability of all kinds of coverages. The Property Protection Program allows
policies to be sold without theft coverage, thereby creating the potential
for greater availability in areas with high theft losses. Because the statewide
average theft loss per residential property policy is approximately $70,
ZIP Codes with a three-year average (1993-1995) of $125 or more theft losses
per policy are assigned one point, while ZIP Codes with an average of $150
of theft losses in each of the three years are assigned two points. 

(F) The number of surplus lines policies. By definition, consumers
who have obtained residential property insurance coverage through a surplus
lines, or non-admitted, carrier have been denied coverage in the admitted
market. Based on a sample of 1994 and 1995 surplus lines policies representing
about 75% of the total surplus lines residential property insurance writings
in Texas, the statewide average of surplus lines policies to total dwelling
and homeowners policies is about 1%. Because surplus lines data is available
by county and not by ZIP Code, ZIP Codes in counties with surplus lines 
percentages
of 2% to 4% are assigned one point, while ZIP Codes in counties with surplus
lines percentage of over 4% are assigned two points. 

(4) Based on the factors and points specified in
paragraph (3) of this subsection, the number of points assigned were totaled
by ZIP Code. Areas with three or more points were identified as the most
underserved or potentially most underserved and generally designated as Class
1 underserved areas. Areas with two points were identified as underserved
or potentially underserved and generally designated as Class 2 underserved
areas. Generally, areas with zero or one point were not designated as 
underserved
areas. The designated areas resulting from these general rules are modified
for four reasons: 

(A) First, areas with two points are generally designated
as Class 2 underserved areas if the areas were geographically contiguous
with other areas of two or more points to promote geographically contiguous
underserved areas. Geographically isolated ZIP Codes with two or more points
are not designated as Class 2 or Class 1 underserved areas to avoid identifying
a random result as an underserved area. In addition, groupings of ZIP Codes
with two or more points but with very few policies are not designated as
Class 2 or Class 1 underserved areas to enable insurers participating in
the MAP and PPP to dedicate their initial commitment of resources to underserved
areas with the greatest potential impact. ( B) Second, certain areas with
zero or one point are designated as Class 2 underserved areas because of
additional information available to the Department regarding availability
problems in certain areas. This additional information included the testimony
presented at public hearings held by the Commissioner for the purpose of
soliciting comments from consumers, agents, insurers and other interested
parties on residential property insurance availability problems. The February
8, 1996, hearing in Arlington, Texas identified severe restrictions in 
residential
property insurance writings by insurers in Dallas and Tarrant counties. The
Department's review of underwriting guidelines that was done as preparation
for the Arlington hearing, which included the insurers' plans for writing
residential property insurance in Tarrant County and the City of Dallas,
confirmed the geographically-targeted restrictions in Tarrant County and
the City of Dallas. Therefore, zero and one point areas in Tarrant County
and the City of Dallas are designated as Class 2 underserved areas because
of severe restrictions imposed by insurers on new and existing business in
those areas. 

(C) Third, certain areas with two points, which are geographically
contiguous with areas of three or more points, are designated as Class 1
underserved areas in Harris and Bexar counties and Bexar counties to create
a geographically contiguous area of eligibility for the Property Protection
Program. 

(D) Fourth, certain areas in the City of Dallas with three
or more points are designated as Class 2 underserved areas to test for the
effectiveness of the Market Assistance Program alone in addressing insurance
availability problems, especially in comparison to the underserved areas
in Harris County which consist solely of Class 1 designations. 

(f) Changes in Class 1 and Class 2 designations. Any changes
in Class 1 or Class 2 designations may be adopted at any time by amending
this section pursuant to the Government Code, sec.sec.2001.004-2001.038
(Administrative Procedure Act). 

(g) Quarterly report. The Department shall, upon request, provide
a quarterly listing of the number of residential property insurance policies
in force by type of policy by company by ZIP code or the number of residential
property insurance policies written by type of policy by company by ZIP code.
The availability of this information will enable insurers and the public
to monitor the effectiveness of the Property Protection Program and the Market
Assistance Program in improving the availability of residential property
insurance.  

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 24, 1996.
TRD-9614016
Caroline Scott

General Counsel and Chief Clerk

Texas Department of Insurance

Effective date October 15, 1996

Proposal publication date: August 6, 1996

For further information, please call: (512) 463-6327

CHAPTER 7. Corporate and Financial Regulation
SUBCHAPTER A. Examination and Corporate Custodian and Tax
28 TAC sec.7.18
The Commissioner of Insurance adopts an amendment to sec.7.18,
concerning the Accounting Practices and Procedures manuals published by the
National Association of Insurance Commissioners (NAIC), with changes to the
proposed text as published in the June 11, 1996, issue of the 
Texas Register (21 TexReg 5238). A public hearing on the proposed
amendment was requested by an association with 25 or more members and was
held on September 11, 1996. 

The adopted section is necessary to comply with Texas Insurance Code, Article
1.27, which requires the commissioner to approve any standard of the NAIC
before the department can require an insurer to comply with such standard.
The amendment to the section is also necessary to comply with 1 Texas 
Administrative
Code sec.91.41(c), which requires a state agency to include the date of
the document to be adopted by reference. The amendment updates the adoption
by reference of the NAIC's Accounting Practices and Procedures Manual for
Life, Accident and Health Insurance Companies for revisions made from October,
1994 through January, 1996 and the NAIC's Accounting Practices and Procedures
Manual for Property and Casualty Companies for revisions made from October,
1994 through October, 1995. The NAIC's Accounting Practices and Procedures
Manual for Health Maintenance Organizations (June, 1991), which is also adopted
by reference by this section, has not been changed since its adoption by
reference on July 13, 1995. The Commissioner did not adopt two of the changes
to the NAIC's Accounting Practices and Procedures Manual for Life, Accident
and Health Insurance Companies that were proposed in the amendment. Appendixes
A and B of Chapter 24, Reinsurance, of the NAIC's Accounting Practices and
Procedures Manual for Life, Accident and Health Insurance Companies are not
included in the update of the adoption by reference of this manual. This
change to the proposed amendment is effected by adding a new paragraph (3)
to subsection (c) of this section. 

These manuals are used by the department in the regulation of the financial
condition of insurers that do business in Texas. The amendment is adopted
to modify the Accounting Practices and Procedures manuals currently adopted
by rule, and to provide notice and opportunity for hearing to insurers and
other interested parties of certain changes in statutory accounting standards.
Since the adoption by reference of the NAIC's Accounting Practices and 
Procedures
Manual for Life, Accident and Health Insurance Companies effective July 13,
1995, the NAIC made substantive revisions or additions to the manual concerning
the accounting treatment of "Dollar Repurchase Agreements," "Reverse Mortgages,"
"State Guarantee Association Promissory Notes," and "Reinsurance." The 
commissioner
did not adopt Appendixes A and B of Chapter 24, Reinsurance, since that matter
is dealt with in sec.7.28 of this Title (relating to Regulation of Accounting
for Reinsurance Agreements by Life, Accident and Health, and Annuity Insurers).
Since the adoption by reference of the NAIC's Accounting Practices and 
Procedures
Manual for Property and Casualty Companies effective July 13, 1995, the NAIC
made substantive revisions or additions to the manual concerning "Dollar
Repurchase Agreements," "Reverse Mortgages," "Loss Adjustment Expenses,"
"Unearned Premium - single or fixed premium policies with coverage periods
in excess of 13 months," "Loss Adjustment Expenses Incurred," and "Reinsurance."
A commenter stated that the adoption of the accounting manuals by reference
violated the intent of Insurance Code, Article 1.27. The commenter stated
that Article 1.27 prohibits the Commissioner from adopting any NAIC standard
unless the application of the standard is expressly authorized by statute.
The agency disagrees with the comment. Article 1.27 states "The department
may not require an insurer to comply with any rule, regulation, directive
or standard adopted by the National Association of Insurance Commissioners
unless application of the rule, regulation directive or standard including
policy reserves, is expressly authorized by statute and approved by the 
commissioner."
The agency is complying with Article 1.27 by adopting the section under the
statutes cited herein which authorize the commissioner to adopt the accounting
standards contained in this section and following the procedures in Texas
Government Code, sec.sec.2001.021-2001.0038 which include an order by
the commissioner adopting the rule. 

The Insurance Alliance of America commented against the amendment to the
section. 

The amendment is adopted under the Insurance Code, Articles 1.03A,
1.27, 1.32, 3.10, 5.75-1, 21.39, and 21.49-1. The Insurance Code, Article
1.03A, provides the commissioner with the authorization to adopt rules and
regulations for the conduct and execution of the duties and functions by
the department only as authorized by a statute. Article 1.27 provides that
the department may not require an insurer to comply with any rule, regulation,
directive or standard adopted by the National Association of Insurance 
Commissioners
unless the application of the rule, regulation, directive or standard is
expressly authorized by statute and approved by the commissioner. Such authority
exists in the other statutes cited herein. Article 1.32 authorizes the 
commissioner
to fix standards for evaluating the financial condition of an insurer. Articles
3.10 and 5.75-1 authorize the commissioner to adopt rules relating to accounting
and financial statement requirements of reinsurance agreements between insurers.
Article 21.28-A authorizes the commissioner to adopt rules concerning the
rehabilitation of insurers. Article 21.39 authorizes the commissioner to
adopt each current formula for establishing reserves recommended by the NAIC.
Article 21.49-1 authorizes the commissioner to adopt rules to carry out the
provisions of the Insurance Holding Company System Regulatory Act. 

sec.7.18. National Association of Insurance Commissioners
Accounting Practices and Procedures Manuals. 
(a) (No change.) 

(b) The commissioner adopts by reference the NAIC Accounting
Practices and Procedures manuals as the accounting standard for the department
when examining financial reports and for conducting statutory examinations
and rehabilitations of insurers licensed in Texas, except where otherwise
provided by law or where the commissioner has adopted rules which provide
otherwise. Specifically, these manuals are the NAIC Accounting Practices
and Procedures Manual for Life, Accident and Health Insurance Companies 
(January,
1996), the NAIC Accounting Practices and Procedures Manual for Property and
Casualty Companies (October, 1995),
and the NAIC Accounting Practices and Procedures Manual for Health Maintenance
Organizations (June, 1991). Whenever any NAIC Accounting Practices and 
Procedures
manual is referred to by statute or rule, it shall mean the particular NAIC
Accounting Practices and Procedures manual (as specified in this subsection
by name and publication date) for the type of insurance regulated by the
statute or rule in question. 

(c) The following exceptions are made to the NAIC Accounting
Practices and Procedures Manual for Life, Accident and Health Insurance 
Companies:
(1)-(2) (No changes.) 

(3) Chapter 24, Reinsurance, Appendixes A and B, are not
adopted by reference. The subject matter therein is covered under sec.7.28
of this title (relating to Regulation of Accounting for Reinsurance Agreements
by Life, Accident and Health, and Annuity Insurers). 

(d)-(e) (No changes.)

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 26, 1996.
TRD-9614157
Caroline Scott

General Counsel and Chief Clerk

Texas Department of Insurance

Effective date: October 17, 1996

Proposal publication date: June 11, 1996

For further information, please call: (512) 463-6327

TITLE 30. ENVIRONMENTAL QUALITY
PART I. Texas Natural Resource Conservation Commission 
CHAPTER 122.Federal Operating Permits
SUBCHAPTER F.General Operating Permits
Available General Operating Permits
30 TAC sec.sec.122.511-122.515
The commission adopts new sec.sec.122.511-122.515, concerning
the requirements for specific general operating permits, with changes to
the proposed text as published in the June 4, 1996, issue of the 
Texas Register (21 TexReg 4955). The changes, in part, reflect the
use of new terminology in referring to the General Permits as General Operating
Permits in the subchapter title, undesignated head title, titles of the adopted
five sections, and within each of these five sections. 

New sec.122.511, concerning Oil and Gas General Operating Permit-Brazoria,
Chambers, Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Hardin,
Harris, Jefferson, Liberty, Montgomery, Orange, Tarrant, and Waller Counties,
provides sites subject to 30 TAC Chapter 122 which are located in these counties
the authority to operate under this General Operating Permit, provided that
the units meet the Qualification Criteria listed in subsection (a) of this
section. General Provisions that the owner or operator must comply with are
listed in subsection (b) of this section. The requirements for each site
subject to 30 TAC Chapter 122 which apply on a unit-specific basis for purposes
of these General Operating Permits are listed in subsection (c) of this new
section.  

Since the rule proposal, several qualification criteria have been revised
or added to sec.122.511(a). These revisions or additions are based on comments
received during the General Operating Permit comment period and corrections
deemed necessary by the commission. The qualification criteria for tanks,
storage vessels, or containers; boilers and steam generators; process vents;
and stationary gas turbines are among the qualification criteria that were
revised. A new qualification criteria stating that process heaters and furnaces
shall only be fired with natural gas fuel was added. 

In addition, several general provisions have been revised or added to 
sec.122.511(b).
Revised general provisions include those for the risk management plan, Title
VI protection of stratospheric ozone, and custom fuel monitoring schedules.
New general provisions for the sulfur feed rate of sweetening units, the
recordkeeping for stationary gas turbines claiming an exemption in Title
40, Code of Federal Regulations, Part 60 (40 CFR 60) in 40 CFR, sec.60.332,
preconstruction authorizations, and fugitive emission control for 
sec.sec.115.352-115.359
are among the provisions which have been added. 

The permit tables in sec.122.511(c) were also revised, added, or deleted.
The permit table for process heaters and furnaces was deleted, since liquid
fuel firing is now not allowed by the qualification criteria. This permit
table deletion necessitated the renumbering of each subsequent figure number
and index number in the permit tables in this subsection. Descriptive titles
were added to each of the permit tables to aid in their use by the regulated
community. Liquid fuel firing references were deleted in the boiler and steam
generator permit table. Other changes to the permit tables include additional
text to provide clarity, along with corrections of typographical errors and
misrepresented applicable requirements. 

New sec.122.512, concerning Oil and Gas General Operating Permit-Gregg,
Nueces, and Victoria Counties, provides sites subject to 30 TAC Chapter 122
which are located in these counties the authority to operate under this General
Operating Permit, provided that the units meet the Qualification Criteria
listed in subsection (a) of this section. General Provisions that the owner
or operator must comply with are listed in subsection (b) of this section.
The requirements for each site subject to 30 TAC Chapter 122 which apply
on a unit-specific basis for purposes of these General Operating Permits
are listed in subsection (c) of this new section. 

Several qualification criteria have been revised, added, or deleted in
sec.122.512(a). The qualification criteria for tanks, storage vessels,
or containers; boilers and steam generators; process vents; and stationary
gas turbines are among the qualification criteria that were revised. A new
qualification criteria stating that process heaters and furnaces shall only
be fired with natural gas fuel was added. The qualification criteria relating
to sec.sec.115.541-115.546 was deleted. 

In addition, several general provisions have been revised or added to 
sec.122.512(b).
Revised general provisions include those for the risk management plan, Title
VI protection of stratospheric ozone, and custom fuel monitoring schedules.
New general provisions for the sulfur feed rate of sweetening units, the
recordkeeping for stationary gas turbines claiming an exemption in 40 CFR,
sec.60.332, and preconstruction authorizations are among the general provisions
that were added. 

The permit tables of sec.122.512(c) were also revised, added, or deleted.
The permit table for process heaters and furnaces was deleted since liquid
fuel firing is now not allowed by the qualification criteria. This permit
table deletion necessitated the renumbering of each subsequent figure number
and index number in the permit tables of this subsection. Descriptive titles
were added to each of the permit tables to aid in their use by the regulated
community. Liquid fuel firing references were deleted in the boiler and steam
generator permit table. Other changes to the permit tables include additional
text to provide clarity, along with corrections of typographical errors and
misrepresented applicable requirements. 

New sec.122.513, concerning Oil and Gas General Operating Permit-Aransas,
Bexar, Calhoun, Matagorda, San Patricio, and Travis Counties, provides sites
subject to 30 TAC Chapter 122 which are located in these counties the authority
to operate under this General Operating Permit, provided that the units meet
the Qualification Criteria listed in subsection (a) of this section. General
Provisions that the owner or operator must comply with are listed in subsection
(b) of this section. The requirements for each site subject to 30 TAC Chapter
122 which apply on a unit-specific basis for purposes of these General Operating
Permits are listed in subsection (c) of this new section. 

Several qualification criteria have been revised, added, or deleted in
sec.122.513(a). The qualification criteria for tanks, storage vessels,
or containers; boilers and steam generators; process vents; and stationary
gas turbines are among the qualification criteria that were revised. A new
qualification criteria stating that process heaters and furnaces shall only
be fired with natural gas fuel was added. The qualification criteria relating
to sec.sec.115.541-115.546 was deleted. 

In addition, several general provisions have been revised or added to 
sec.122.513(b).
Revised general provisions include those for the risk management plan, Title
VI protection of stratospheric ozone, and custom fuel monitoring schedules.
New general provisions for the sulfur feed rate of sweetening units, the
recordkeeping for stationary gas turbines claiming an exemption in 40 CFR,
sec.60.332, and preconstruction authorizations are among the general provisions
that were added. 

The permit tables of sec.122.513(c) were also revised, added, or deleted.
The permit table for process heaters and furnaces was deleted, since liquid
fuel firing is now not allowed by the qualification criteria. This permit
table deletion necessitated the renumbering of each subsequent figure number
and index number in the permit tables of this subsection. Descriptive titles
were added to each of the permit tables to aid in their use by the regulated
community. Liquid fuel firing references were deleted in the boiler and steam
generator permit table. Other changes to the permit tables include additional
text to provide clarity, along with corrections of typographical errors and
misrepresented applicable requirements. 

New sec.122.514, concerning Oil and Gas General Operating Permit-All
Texas Counties Except for Aransas, Bexar, Brazoria, Calhoun, Chambers, Collin,
Dallas, Denton, El Paso, Fort Bend, Galveston, Gregg, Hardin, Harris, Jefferson,
Liberty, Matagorda, Montgomery, Nueces, Orange, San Patricio, Tarrant, Travis,
Victoria, and Waller Counties, provides sites subject to 30 TAC Chapter 122
which are located in these counties the authority to operate under this General
Operating Permit, provided that the units meet the Qualification Criteria
listed in subsection (a) of this section. General Provisions that the owner
or operator must comply with are listed in subsection (b) of this section.
The requirements for each site subject to 30 TAC Chapter 122 which apply
on a unit-specific basis for purposes of these General Operating Permits
are listed in subsection (c) of this new section. 

Several qualification criteria have been revised, added, or deleted in
sec.122.514(a). The qualification criteria for tanks, storage vessels,
or containers; boilers and steam generators; process vents; and stationary
gas turbines are among the qualification criteria that were revised. A new
qualification criteria stating that process heaters and furnaces shall only
be fired with natural gas fuel was added. 

In addition, several general provisions have been revised or added to 
sec.122.514(b).
Revised general provisions include those for the risk management plan, Title
VI protection of stratospheric ozone, and custom fuel monitoring schedules.
New general provisions for the sulfur feed rate of sweetening units, the
recordkeeping for stationary gas turbines claiming an exemption in 40 CFR,
sec.60.332, and preconstruction authorizations are among the general provisions
that were added. 

The permit tables of sec.122.514(c) were revised, added, or deleted.
The permit table for process heaters and furnaces was deleted, since liquid
fuel firing is now not allowed by the qualification criteria. This permit
table deletion necessitated the renumbering of each subsequent figure number
and index number in the permit tables of this section. Descriptive titles
were added to each of the permit tables to aid in their use by the regulated
community. Liquid fuel firing references were deleted in the boiler and steam
generator permit table. Other changes to the permit tables include additional
text to provide clarity, along with corrections of typographical errors and
misrepresented applicable requirements. 

New sec.122.515, concerning Bulk Fuel Storage Terminal General Operating
Permit, provides sites subject to 30 TAC Chapter 122 the authority to operate
under this General Operating Permit, provided that the units meet the 
Qualification
Criteria listed in subsection (a) of this section. General Provisions that
the owner or operator must comply with are listed in subsection (b) of this
section. The requirements for each site subject to 30 TAC Chapter 122 which
apply on a unit-specific basis for purposes of these General Operating Permits
are listed in subsection (c) of this new section. 

A new qualification criteria for stationary vents (similar to the qualification
criteria in sec.sec.122.511-122.514 was added in conjunction with the
addition of the stationary vent permit tables in sec.122.515(c). 

Several general provisions have been revised in sec.122.515(b). Revised
general provisions include those for the risk management plan, Title VI 
protection
of stratospheric ozone, and compliance with all applicable requirements.
The permit tables of sec.122.515(c) were revised and added. Descriptive
titles were added to each of the permit tables to aid in their use by the
regulated community. Three permit tables addressing stationary vents were
added. Other changes to the permit tables include additional text to provide
clarity, along with corrections of typographical errors and misrepresented
applicable requirements. 

Emission units with requirements not codified in the General Operating
Permit, other than National Emissions Standard for Hazardous Air Pollutants
(NESHAP) for Source Categories (Title 40, Code of Federal Regulations, Part
63 (40 CFR 63)), will require another type of federal operating permit (either
a Site Operating Permit or a Temporary Operating Permit). The remaining emission
units at the site can apply for and receive authorization to operate under
a General Operating Permit. 

Currently, the NESHAP for Bulk Gasoline Terminals and Pipeline Breakout
Stations (40 CFR 63, Subpart R) is the only 40 CFR 63 subpart that applies
to units that may be authorized to operate under these General Operating
Permits. Specifically, the requirements of this subpart potentially affect
only sources applying for authorization to operate under the General Operating
Permit in sec.122.515. However, the proposed sec.122.515 did not codify
the requirements of 40 CFR 63, Subpart R because, at the time of proposal,
the United States Environmental Protection Agency (EPA) has not delegated
40 CFR 63, Subpart R to the commission for enforcement. Therefore, 40 CFR
63, Subpart R is currently a requirement that is federally enforceable only
by the Administrator of the EPA. The omission of the 40 CFR 63, Subpart R
requirement from sec.122.515 does not preclude an owner or operator of
a unit from applying to be authorized to operate that unit under this General
Operating Permit. Additionally, the omission of this subpart does not relieve
the owner or operator from having to comply with the requirements of 40 CFR
63, Subpart R. The commission expects to receive delegation of 40 CFR 63,
Subpart R in the future. A General Operating Permit will then be developed
to codify the requirements of this regulation. Owners or operators who have
received authorization to operate under the General Operating Permit for
sec.122.515 should then apply for this new permit if they are affected
by 40 CFR 63, Subpart R. The commission anticipates handling other 40 CFR
63 requirements in the same manner. 

The following 32 issues have been reviewed by the commission for the purposes
of developing official interpretations of applicable rules. The final 
determinations
presented have been utilized to develop the Qualification Criteria, General
Provisions, and Permit Tables in each of the General Operating Permits, and
were based on the analysis of testimony and the continuing review of these
determinations by the commission during the public comment period. In the
case of determinations involving federal standards, the commission has utilized
available guidance from the EPA. 

1. Determination of applicability of Title 30, Texas Administrative Code,
Chapter 115 (30 TAC Chapter 115) in sec.115.342 versus sec.115.352 for
volatile organic compound (VOC) fugitive emission controls at natural 
gas/gasoline
processing plants. 

The commission determines that currently, sources have the option of complying
with either the "old" rules (sec.sec.115.342-115.349) or the "new" rules
(sec.sec.115.352-115.359) until November 15, 1996. After November 15,
1996, sources will be required to comply with both the "old" rules (unless
they are repealed by November 15, 1996) and the "new" rules. However, the
commission determines that after November 15, 1996, compliance with the "new"
rules (sec.sec.115.352-115.359) is deemed compliance with the "old" rules
(sec.sec.115.342-115.349) in accordance with sec.122.145(e). 

[sub]
x monitoring requirements under 40 CFR 60, Subpart GG when exempted
from NOtype-name="sub">x emission standards of Subpart GG. 
Note: this request was clarified to the applicable requirements (i.e.,
monitoring, recordkeeping, testing, and reporting) in 40 CFR, sec.60.334
and 40 CFR, sec.60.335 for NOtype-name="sub">xemissions when
claiming an exemption under 40 CFR, sec.60.332. 

The commission determines that there are monitoring, recordkeeping, testing,
and reporting requirements associated with NOtype-name="sub">x
emissions (or nitrogen content in the fuel) when claiming the exemptions
stated 40 CFR, sec.60.332(e), (g), (h), (i), (j), or (l). The commission
is making a stringency determination in accordance with sec.122.145(e)
that if an owner and/or operator maintains records to prove the unit's exemption
status, the unit is deemed in compliance with the applicable monitoring,
recordkeeping, testing, and reporting requirements associated with NO
type-name="sub"> x emissions (or nitrogen content in the fuel). 

When claiming the exemption unit's stated in 40 CFR, sec.60.332(f), the
facility shall comply with the reporting requirement stated in 40 CFR, 
sec.60.334(c)(3).
When claiming the exemption stated in 40 CFR, sec.60.332(k), the facility
shall comply with the reporting requirement stated in 40 CFR, sec.60.334(c)(4).
Affects the permit table in sec.122.511(c)(1). 

3. Determination of applicability of sec.115.126(a)(2) and (b)(2) when
complying with sec.115.126(a)(3) and (b)(3). 

The commission determines that sec.115.126(a)(3) or (b)(3) contain recordkeeping
requirements which may be followed instead of sec.115.126(a)(2) or (b)(2)
for sources with emission rates and concentrations below 50% of applicable
exemption limits. Affects the permit tables in sec.122.511(c)(13) and 
sec.122.512(c)(12).
4. Determination of whether a "depressurization of a compressor" would
trigger applicability of sec.sec.115.121-115.129, relating to the undesignated
head Vent Gas Control in 30 TAC Chapter 115. 

The commission determines that if depressurization of a compressor is done
for start-ups, shutdowns, or maintenance, and in accordance with sec.101.11,
the depressurization would be exempt from sec.sec.115.121-115.125. Notification
is submitted through the appropriate Texas Natural Resource Conservation
Commission regional office and to local air pollution control agencies. Affects
the permit tables in sec.sec.122.511(c)(13); 122.512(12); and 122.513(c)(12).
5. Determination of whether a flare may be considered a direct-flame 
incinerator.
The commission determines that a flare is not considered to be a direct-flame
incinerator. Demonstration of compliance requirements for flares are identified
in 30 TAC Chapter 111 in sec.111.111(a)(1) relating to Visible Emissions,
30 TAC Chapter 115, and 40 CFR 60, Subpart A in sec.60.18. Affects the
permit tables in sec.sec.122.511(c)(4), (13), (16), and (17); 122.512(c)(4),
(12), (14), and (15); and 122.515(c)(4), (5), (10), (11), (13), and (14).
6. Determination of any applicable monitoring, testing, recordkeeping,
and reporting requirements when claiming any exemptions in sec.115.137(b)(1),
(2), and (4). 

Note: this request was clarified to include the same request for 
sec.115.137(b)(3).
The commission determines that sources exempted from sec.115.137(b)(1),
(2), and (4) would have to comply with the monitoring and recordkeeping 
requirements
of sec.115.136(b)(1) and (4). There are no testing or reporting requirements
when claiming those exemptions. Sources exempted from sec.115.137(b)(3)
would have to comply with the monitoring, testing, and recordkeeping 
requirements
of sec.115.135(b)(5) and sec.115.136(b)(1), (3), and (4). There are no
reporting requirements when claiming this exemption. Affects the permit tables
in sec.122.512(c)(15) and sec.122.515(c)(14). 

7. Determination of any applicable monitoring and recordkeeping requirements
in sec.115.136 when claiming the exemptions in sec.115.137(a)(3) and
(c)(4).  

The commission determines that VOC water separators claiming the exemption
in sec.115.137(a)(3) are subject to the recordkeeping requirements of 
sec.115.136(a)(1)
and (4). For VOC water separators claiming the exemption in sec.115.137(c)(4),
there are no recordkeeping requirements. Affects the permit tables in 
sec.sec.122.511(c)(17);
122.513(c)(15); and 122.515(c)(13) and (15). 

8. Determination of applicability of sec.115.112(a)(2)(F) and sec.115.114(a)
for internal floating roof tanks with secondary seals. 

The commission determines that in accordance with the tables shown in 
sec.115.112,
when an internal floating roof is required to comply with sec.115.112(a)(1),
a secondary seal is not required for compliance. Therefore, since the secondary
seal is not required, the facility is not required to comply with 
sec.115.112(a)(2)(F).
The facility is required to comply with sec.115.114(a)(1) only with respect
to the internal floating roof and the primary seal requirements. Affects
the permit table in sec.122.515(c)(4). 

9. Determination of applicability of sec.115.116(a) and (b)(1) when claiming
the exemptions in sec.115.117(a) and (b)(1). 

The commission determines that the monitoring and recordkeeping requirements
of sec.115.116(a)(1) and (b)(1) both mandate that the exempted sources
maintain records for the type of VOC stored and the average monthly true
vapor pressure of the stored liquid. This includes sources which meet the
exemption, but contain liquids with true vapor pressures greater than 1.0
pounds per square inch absolute. Affects the permit tables in 
sec.sec.122.511(c)(4);
122.512(c)(4); and 122.515(c)(4) and (5). 

10. Determination of applicability of secondary seal requirements for external
floating roof tanks storing waxy, high pour point crude oil. 

The commission determines that if a storage tank meets the exemption in
sec.115.117(a)(5) for external floating roof tanks storing waxy, high pour
point crude oil and the compound in the storage tank is not changed to a
non-exempt compound, the storage tank would not be required to have a secondary
seal of any kind. Affects the permit table in sec.122.515(c)(4) and (5).
11. Determination of whether "gun barrels" should be classified as tanks
or VOC water separators. 

The commission determines that gun barrels should be considered as water
separators and are subject to the water separation rules stated in 
sec.sec.115.131-115.139.
In rare situations, a gun barrel may perform the storage of VOC containing
liquids. If a gun barrel is used in this manner, then it should be considered
a storage tank or container and would then be subject to the Storage of VOC
rules stated in sec.sec.115.112-115.119. Affects the permit tables in
sec.sec.122.511(c)(4) and (17); 122.512(c)(4) and (15); 122.513(c)(4)
and (15); and 122.515(c)(13), (14), and (15). 

12. Determination of applicability of sec.111.111(a)(1)(B) for vents
with multiple sources. 

The commission determines that a stationary vent with multiple sources
of which at least one source was constructed
after January 31, 1972, the vent is subject to sec.111.111(a)(1)(B). If 
all of the sources routed to the vent were constructed
on or before January 31, 1972, then the vent is subject to sec.111.111(a)(1)(A).
Please note that a vent could be subject to sec.111.111(a)(1)(C) based
upon the flowrate. Affects the permit table in sec.122.511(c)(12). 

13. Determination of applicability of sec.115.214(a)(3) when claiming
the exemption in sec.115.217(a)(5). 

The commission determines that sec.115.214(a)(3) is applicable whenever
the exemption under sec.115.217(a)(5) is also applicable. Affects the permit
table in sec.122.515(c)(4). 

14. Determination of the definition of a VOC process vent for use in determining
the applicability of sec.sec.115.121-115.129, relating to the undesignated
head Vent Gas Control. 

The commission determines that if a vent originates from or is associated
with an operation that can be defined as a process, then it is a "process
vent." Examples of process vents in the oil and gas industry would include
any vent originating from or associated with oil/gas processing or treatment
equipment. This could include, but is not limited to, vent streams from glycol
dehydrators, wastewater treatment equipment, or any other equipment containing
VOCs such as crude oil or natural gas with non-methane, non-ethane components.
Affects the permit tables in sec.sec.122.511(c)(13); 122.512(c)(12);
122.513(c)(12); and 122.515(c)(18), (19), and (20). 

15. Determination of whether a vent on a VOC water separator should be
considered a VOC process vent for purposes of determining applicability of
30 TAC Chapter 115. 

The commission determines that emissions from VOC water separators are
subject to the Water Separation rules stated in sec.sec.115.131-115.139
and are not subject to the Vent Gas Rules stated in sec.sec.115.121-115.129.
If a VOC water separator is exempted from the Water Separation rules, it
is not subject to the Vent Gas Control rules. Affects the permit tables in
sec.sec.122.511(c)(13); 122.512(c)(12); and 122.513(c)(12). 

16. Determination of the requirements (including 30 TAC Chapter 111) for
flares used only for emergencies and/or upsets. 

The commission determines that there are no requirements in Chapter 111
that are applicable to flares used only during
emergency or upset conditions. Affects the permit table in sec.122.511(c)(12)
and sec.122.515(c)(8). 

17. Determination of whether the alternative standards in 40 CFR, sec.60.483-1
and sec.60.483-2 are allowed for all valves, or only for valves in gas/vapor
or light liquid service. 

The commission determines that unless the EPA has determined that some
other emissions limitation is equivalent to sec.60.482-8 pursuant to sec.60.482-
1
and sec.60.484, valves in heavy liquid service are always required to comply
with sec.60.482-8, and that in general, the provisions of sec.60.483-1
or sec.60.483-2 may not be substituted for the standards in sec.60.482-8,
except where the standards are identical. (Both sec.60.482-8 and sec.60.483
use the same Method 21 procedure for monitoring and the same time limits
for leak repairs. They only differ in that no systematic Method 21 monitoring
is required for sec.60.482-8, unless a leak becomes apparent.) In summary,
unless the EPA has granted an equivalency determination for some other form
of control, whenever it is noticed that a valve in heavy liquid service is
potentially leaking, the valve must be monitored and repaired (if necessary),
as outlined in sec.60.482-8. A facility may not delay the monitoring/repair
until the next scheduled monitoring period as would be permitted by sec.60.483
unless EPA has approved the sec.60.483 standards as equivalent to sec.60.482-8.
Affects the permit table in sec.122.511(c)(6). 

18. Determination of the requirements under 40 CFR 60, Subpart LLL for
gas sweetening units with a design capacity of greater than or equal to 2.0
long tons per day (LTPD), but less than 2.0 LTPD 
actual sulfur feed rate. 

The commission determines that any unit regardless of design capacity which
commenced construction or modification after January 20, 1984, has to comply
with 40 CFR 60, Subpart LLL. Units with a design capacity ≥ 2.0 LTPD must
comply with applicable monitoring, testing, recordkeeping, and reporting
requirements stated in 40 CFR 60, Subpart LLL. Subpart LLL does not 
differentiate
according to operating capacity, and exemptions from control requirements
are based upon design capacity. Tables 1 and 2 in sec.60.642 are to be
utilized to determine the minimum sulfur dioxide (SOtype-name="sub">
2) emission reduction efficiency, and these tables deal only with
units that have a sulfur feed rate ≥ 2.0 LTPD. Hence, it is not feasible
to calculate the efficiency for units with actual operating capacity <2.0
LTPD from these tables. For facilities that have a design capacity ≥ 2.0
LTPD, but have an actual feed rate of <2.0 LTPD, there exists two alternative
methods for demonstrating compliance with Subpart LLL. The first method requires
a facility to limit its sulfur feed rate in a Title V federal operating permit
and make this limit federally enforceable. Sulfur feed rates shall be 
 monitored and recorded
monthly to demonstrate that the unit is operating at <2.0 LTPD.
The second method requires an owner or operator to physically change the
design capacity of the gas sweetening unit to <2.0 LTPD (e.g., putting
a flow restrictor into the inlet of the gas sweetening unit) and demonstrate
that their new design capacity is <2.0 LTPD. In this case, the only 
requirement
will be sec.60.647(c); there will be no other monitoring or recordkeeping
requirements. Affects the permit table in sec.122.511(c)(5). 

19. Determination of whether water injection and steam injection are considered
different NOtype-name="sub">xcontrol methods under 40 CFR 60,
Subpart GG, or if the terms are used interchangeably. 

The commission determines that the use of the terms "water injection" and
"steam injection" can be considered to be interchangeable in the regulations
and have the same meaning. Affects the permit table in sec.122.511(c)(1).
20. Determination of the meaning of the exemption stated in 40 CFR 60,
Subpart GG in sec.60.332(j). 

The commission determines that when this regulation was promulgated in
1977, it did not cover non-utility stationary gas turbines greater than 100
million British thermal units per hour (MMBtu/hr). Section 60.332(j) was
added to Subpart GG on January 27, 1982, as a result of an industry petition
for a proposal to reconsider NOtype-name="sub">x limits on large
stationary gas turbines. This proposal resulted in an amendment (adding new
sec.60.332(j)) which specifically exempted units from the NOtype-name="sub">
x emission limits stated in sec.60.332(a) for all units that were
constructed, modified, or reconstructed during the period from October 3,
1977 to January 27, 1982 AND were required in the September 10, 1979, issue
of the Federal Register (44 FR 52792) to
comply with sec.60.332(a)(1). Affects the permit table in sec.122.511(c)(1).
21. Determination of whether an incinerator may be defined as a furnace,
and under what circumstances. Title 30, Texas Administrative Code, Chapter
112 (30 TAC Chapter 112) impacts. 

General Operating Permit rules have been revised to exclude furnaces burning
liquid fuel and as a result, this question became irrelevant for the purpose
of General Operating Permits rulemaking. However, the commission will resolve
this issue at a later date through the commission's Rule Interpretation Team
established by the commission to address these kinds of issues. 

[sub]x requirements
(e.g., monitoring, testing, etc.) or sulfur dioxide requirements for turbines
in which 40 CFR 60, Subpart GG applies, but are exempt from a NOtype-name="sub">
x standard in sec.60.332(a). 

Note: This issue was clarified and combined with issue number 2. Affects
the permit table in sec.122.511(c)(1). 

23. Determination of the definition of a natural gas processing plant as
it relates to 40 CFR 60, Subpart KKK. 

The interpretation is withdrawn. The commission is reconsidering the use
of the phrase "natural gas processing plant" and of the term "extraction"
to clarify how 40 CFR 60, Subpart KKK applies to emission units associated
with the natural gas production industry. 

24. Determination of applicability of sec.112.7 when combusting a sulfur
recovery unit's waste gas stream. 

The commission determines that sec.112.7 would still apply when combusting
a waste gas stream from the sulfur recovery unit. Affects the permit table
in sec.122.511(c)(11). 

25. Determination of whether gas sweetening units located in marshes or
bays are considered a part of the territorial seas or not for purposes of
determining 40 CFR 60, Subpart LLL applicability. 

The commission determines that 40 CFR 60, sec.60.640 and sec.60.641
specify that Subpart LLL applies to all facilities not located in the 
territorial
seas or outer continental shelf; therefore, units located landward of the
territorial seas baseline would be subject
to the regulation. In other words, facilities located inland of "the low-water
line along the coast" would be subject to Subpart LLL. This would apply to
units located in marshes or on wetlands. Generally, units located on the
landward side of the "line joining the low-water marks of its natural entrance
points" of bays would also be subject to regulation under Subpart LLL. Units
located seaward of this line would be considered to be located in the 
territorial
seas and would thus be exempt from this Subpart. Applicability of Subpart
LLL to specific units located on or near bays can be ascertained by examining
navigation charts to determine the exact location of the territorial seas
baseline. Therefore, if the unit is located seaward of the baseline, it would
be exempt from Subpart LLL, and if it is landward, it would 
not be exempt. Units located more than nine nautical miles from the
coast would also be exempt. Affects the permit tables in sec.122.511(c)(5)
and (10). 

26. Determination of whether a glycol dehydrator firebox that burns reboiler
exhaust can be considered both a process heater and a control device. 

Note: this request was clarified to determine if a glycol dehydrator reboiler
which fires with liquid fuel; and routes its still vent emissions (which
contain VOCs such as benzene, toluene, ethyl benzene, xylene, etc.) back
to its firebox is considered both a control device for purposes of meeting
30 TAC Chapter 115 Vent Gas Control requirements AND a process heater with
SOtype-name="sub"> 2 requirements. 

The commission determines that the glycol dehydrator reboiler which uses
its still vent emissions along with liquid fuel to fire its firebox can be
considered both a process heater and a control device and is subject to 
sec.112.2
(Compliance, Reporting, and Recordkeeping), sec.112.9 (Allowable Emission
Rates-Combustion of Liquid Fuel), and sec.sec.115.121-115.129 (Vent Gas
Control). Affects the permit tables in sec.sec.122.511(c)(13), 122.512(c)(12),
and 122.513(c)(12). 

27. Determination of whether the construction date described in 40 CFR
60, Subpart GG in sec.60.330(b) is the manufactured date of the turbine
or the installation of the turbine at the site. 

The commission determines that per sec.60.330(b), October 3, 1977, refers
to the date which construction, modification, or reconstruction of a stationary
gas turbine commenced. Commenced means that an owner or operator has undertaken
a continuous program of construction or modification or has entered into
a contractual obligation to undertake and complete, within a reasonable time,
a continuous program of construction or modification. The staff consulted
with the EPA staff from the EPA regional office in Dallas (EPA Region 6).
The EPA staff concurred with this interpretation, and further indicated that
the commencement date also refers to the date when a construction contract
or purchase order (a contractual obligation) is signed by the affected parties.
For the purpose of determining the applicability of 40 CFR 60, Subpart
GG, the construction date is interpreted to mean the earlier of either: the
fabrication, erection, or installation of an affected facility; or the date
upon which a contractual obligation, such as a construction contract or a
purchase order, is entered into by both affected parties. Per EPA's comments,
dated July 18, 1996, on the General Operating Permits rule proposal, the
date of manufacture is usually not used for defining the "construction" date
for determining the applicability date of Subpart GG. The exception is when
a manufacturer puts his own gas turbine into use. The manufacturer can then
be defined as a Subpart GG owner or operator, as long as the turbine manufacture
date is past the Subpart GG applicability date and all other Subpart GG 
applicability
criteria have been met. Regarding installation, it is important to note that
sec.60.14(e)(6) states that the relocation of an existing facility shall
not, by itself, be considered a modification. Affects the permit table in
sec.122.511(c)(1).  

28. Determination of applicability of sec.115.116(a)(1) and (b)(1) for
external floating roof tanks not required by 30 TAC Chapter 115 to install
control devices. 

Note: this request was clarified to determine if a tank equipped with an
external floating roof by choice (i.e., not required by 30 TAC Chapter 115)
which also meets the criteria in sec.115.116(a)(1) or (b)(1) (i.e., meets
the secondary seal exemption), is required to keep the records stated in
those two citations. 

The commission determines that the recordkeeping requirements of 
sec.115.116(a)(1)
and (b)(1) would not be applicable for a VOC, which is not required to be
stored in a tank with a floating roof to meet the emission control requirements
of sec.115.112, but is equipped with an external floating roof by choice.
If a liquid VOC is placed in such a tank, which has a better emission control
system than required by sec.115.112, relating to Control Requirements,
the recordkeeping requirements are determined by the applicable control system
required for the liquid, as stated in sec.115.112, and not by the control
system installed on the tank. Affects the permit tables in sec.122.515(c)(4)
and (5). 

29. Determination of applicability of sec.112.9(b) when (c) applies.
The commission determines that since sec.112.9(b) is not listed as a
paragraph under sec.112.9(a), it carries the same weight as all other 
subsections.
Thus, it should be applied to all of the standards listed within sec.112.9,
including sec.112.9(c). Affects the permit table in sec.122.511(c)(11).
30. Determination of applicability of sec.115.114(b)(2)-(4) for tanks
with external floating roofs not required to have secondary seals. 

The commission determines that secondary seal inspection rules are not
applicable for the category of tanks in question because there is no requirement
for having secondary seals. Affects the permit table in sec.122.515(c)(5).
31. Determination of the meaning of the phrase "as appropriate" in the
testing citations in sec.111.111(a)(1)(F), (7)(B), and (8)(B). 

The commission determines that the phrase "as appropriate" means that the
owner or operator of an affected source can use any of the listed test methods
to show compliance with the requirements, depending on whichever test method
is applicable for that particular source. Affects the permit table in 
sec.122.511(c)(12).
32. Determination of the applicability of the surface coating requirements
in 30 TAC Chapter 115 to maintenance painting activities and the coating
of miscellaneous metal parts and products. 

The commission determines that surface coating operations performed on
in-place and on-site equipments are classified as "maintenance coating" 
operations,
and are not subject to the surface coating regulations in 30 TAC Chapter
115. The commission also determines that if the surface coating operations
are performed at a central location, like an on-site building, then the coating
operations cannot be classified as "maintenance coating" operations. Therefore,
the miscellaneous parts coating, performed at an on-site maintenance building,
is subject to the surface coating regulations in 30 TAC Chapter 115. Does
not affect any table, since this is a site-wide provision. 

Five additional issues were also brought to the attention of the commission
in order to clarify the applicability of the regulatory requirements. The
issues and their final determinations are as follows. 

33. Citation 40 CFR, sec.60.115b(b) makes a reference to citation Title
40, Code of Federal Regulations, Part 61 (40 CFR 61) in sec.61.112b(a)(2)
for control devices. Should the reference be sec.60.112b(a)(2)? 

The commission determines that citation 40 CFR, sec.60.115b(b) makes
reference to citation 40 CFR, sec.61.112b(a)(2) for control devices. The
reference should be 40 CFR, sec.60.112b(a)(2). 

34. Citation 40 CFR, sec.60.115b(a)(4) makes a reference to 40 CFR, 
sec.61.112b(a)(1)
for control devices. Should the reference be 40 CFR, sec.60.112b(a)(1)?
The commission determines that citation 40 CFR, sec.60.115b(a)(4) makes
reference to citation 40 CFR, sec.61.112b(a)(1) for control devices. The
reference should be 40 CFR, sec.60.112b(a)(1). 

35. Citation 40 CFR, sec.60.334(c)(3) makes a reference to the ice fog
exemption in 40 CFR, sec.60.332(g). Should the reference be 40 CFR, 
sec.60.332(f)?
The commission determines that citation 40 CFR, sec.60.334(f)(1) makes
reference to the ice fog exemption in 40 CFR, sec.60.332(g). The reference
should be 40 CFR, sec.60.332(f). 

36. Citation 40 CFR, sec.60.335(f)(1) makes a reference to the equation
in 40 CFR, sec.60.335(b)(1). Should the reference be 40 CFR, sec.60.335(c)(1)?
The commission determines that citation 40 CFR, sec.60.335(f)(1) makes
reference to the equation in 40 CFR, sec.60.335(b)(1). The reference should
be 40 CFR, sec.60.335(c)(1). 

37. Determination as to whether the "non-dedicated loading lines" that
are referenced in sec.115.217(a)(10)(D) pertain 
only to marine terminals, or to any
non-dedicated loading line. 

The commission determines that the "non-dedicated loading lines" referenced
in sec.115.217(a)(10)(D) pertain only to
marine terminals, and not to just any non-dedicated loading lines. 

The commission has prepared a Takings Impact Assessment for these rules
pursuant to Texas Government Code, sec.2007.043. The purpose of this rulemaking
is to provide affected persons with an alternate permitting mechanism to
achieve compliance with 30 TAC Chapter 122. These rules will substantially
advance this specific purpose because they will codify the General Operating
Permits which may be used by the applicants who are required to submit an
operating permit. The promulgation and enforcement of these rules will not
burden private real property, and this rulemaking proposal is also an exempt
action pursuant to Texas Government Code, sec.2007.003(b)(4), since the
commission is fulfilling its requirement to implement a federal mandate (Title
V of the 1990 Federal Clean Air Act Amendments). 

A total of five interested parties submitted written testimony on the proposal.
Texas Mid-Continent Oil and Gas Association (TMOGA) strongly supported the
intent of the proposed revisions, but suggested changes and clarifications.
The Association of Texas Intrastate Natural Gas Pipelines and the Gas Processors
Association (ATINGP/GPA) supported the intent of the proposed revisions and
also voiced support of TMOGA's comments. The United States Environmental
Protection Agency (EPA) submitted comments on the proposal and items of concern
that it suggested be addressed in the public record, but did not indicate
support or opposition to the proposal. Natural Gas Pipeline of America (NGPA)
requested an extension of the public comment period, but did not indicate
support or opposition to the proposal. An individual suggested changes to
the underlying requirements codified in the General Operating Permits, mainly
in the interest of helping ozone nonattainment areas reach attainment status.
In addition to the written comments, one interested party submitted oral
testimony for an option to the requirement of using certified opacity readers
at a site to determine compliance with opacity limits. 

The comments and their responses are divided into seven sections to provide
some structure for the analysis of testimony. 

Comments in General. An individual requested
the use of Method 22 under certain conditions as an acceptable alternative
to using Method 9. 

At present, there is no allowance in Chapter 111 for this proposed option
as made by the commenter. Other than the continuous opacity monitor and Light
Detection and Ranging methods as allowed to determine compliance for 
sec.111.111(a)(1)(A),
(B), and (C), only Test Method 9 or an alternative that has been approved
by both the executive director of the commission and the Administrator of
the EPA are the current options available to sources affected by sec.111.111
in order to determine compliance. An approval of a sec.111.111(a)(1)(F)
request by the executive director of the commission may entail either case-by-
case
determinations, which are not suitable for inclusion in the General Operating
Permits, or source category specific determinations (e.g., natural gas fired
engines and gas turbines) which may be included in the General Operating
Permits at a later date through a separate rulemaking. Another approach would
be to amend sec.111.111(a)(1)(F) to allow for this proposal, which would
then require a separate rulemaking for General Operating Permits to implement
this newly promulgated requirement. The presence of visible emissions does
not necessarily mean that the process is in an upset condition, as the commenter
proposes. Although this is frequently true, it may not always be a correct
presumption in all possible cases. Therefore, the commission cannot accept
this proposal at this time during this rulemaking. 

In additional background information submitted by the commenter, the commenter
is correct in saying that the existing applicable requirements that are being
codified in the General Operating Permits do not require a source-supplied
certified observer to be on-site. In the past, it has been the commission's
burden to determine noncompliance, and not the owner's or operator's of the
source to determine compliance with the applicable requirements. However,
compliance with opacity requirements contained in sec.111.111(a)(1) will
require an initial and ongoing demonstration of compliance to be performed
using one of the methods listed in sec.111.111(a)(1)(F) by the owner or
operator of the source affected by the Texas Federal Operating Permits Program.
The Association of Texas Intrastate Natural Gas Pipelines and the Gas Processors
Association (ATINGP/GPA) supported the commission's efforts in lessening
operating permits' requirements for interim program sources, and supported
the comments of the Texas Mid-Continent Oil and Gas Association (TMOGA).
The commission acknowledges the support of the TMOGA comments declared
by these two trade associations. 

It is the EPA's position that Minor New Source Review (MNSR) is an applicable
requirement. While the exclusion of certain MNSR provisions may be allowed
under interim approval of the program, the State will be required to revise
the program as specified in the June 25, 1996, 
Federal Register notice. At that time, each of the general operating
permits will need to be revised to include MNSR as an applicable requirement.
The commission is continuing to work with EPA on resolution of this issue
and will address the MNSR requirements for approval of the full program.
Since past noncompliance may be discovered by the applicant during the
application process, EPA requested that the State clarify, for the public
record, that past noncompliance should be rectified. 

All emission units shall be in compliance with their applicable requirements
at the time of application as per the qualification criteria in subsection
(a)(3) of each proposed General Operating Permit. 

EPA requested that the commission add a provision to the general operating
permit conditions that requires the permittee to reapply for the general
operating permit every five years, as per sec.70.6(d). 

The commission is continuing to work with EPA on resolution of this issue
and will address the General Operating Permit five-year renewal requirements
for approval of the full program. 

EPA stated that pursuant to sec.70.6(a)(3) and sec.122.145(b)(2), periodic
monitoring requirements need to be required where there are no monitoring
or periodic testing requirements currently in existence. 

The commission is continuing to work with EPA on resolution of this issue
and will address the periodic monitoring requirements for approval of the
full program. Until the commission adopts, through rulemaking, a version
of Title 40, Code of Federal Regulations, Part 64 (the Compliance Assurance
Monitoring rule), the applicant will use the monitoring, testing, recordkeeping,
and reporting requirements contained in the applicable requirements for the
individual unit and will use good engineering practice to maintain the site
and equipment in good working order and operating properly during normal
facility operations to meet the periodic monitoring requirements of 30 TAC
Chapter 122. 

TMOGA stated that it is a trade association representing all segments of
the oil and gas industry in Texas. TMOGA has more than 2,000 members, including
50 of the state's largest energy companies. Its members account for more
than 90% of all oil and gas production in Texas and for approximately 95%
of the refining capacity in Texas. TMOGA added that it appreciates the 
opportunity
to comment. 

The commission acknowledges the position that TMOGA has in its representation
of a significant number of sources affected by the Texas Title V Federal
Operating Permits Program. 

TMOGA strongly supported the promulgation of these permits and TNRCC's
efforts in developing them in a timely manner with industry input. 

The commission appreciates the opportunity to work with TMOGA and realizes
the importance of the benefit that the General Operating Permits will play
in the regulated community's ability to comply with the Texas Interim Federal
Operating Permits Program. 

TMOGA believes that this general permit incorporates all Title V applicable
requirements (except as otherwise noted in these comments) and requested
the following clarification from the TNRCC. Does TNRCC intend for noncompliance
with an unintentional omission to be a Title V violation? If so, industry
proposed that the proper remedy would be to revise the general permit(s)
to incorporate unintentional omissions as expeditiously as possible. While
noncompliance with an applicable requirement cannot be exempt from enforcement
by the agency, noncompliance with unintentional omissions should not be 
considered
a Title V violation and carry Title V penalties. 

In order to obtain and maintain authorization for a site to operate, all
applicable requirements must be codified in an operating permit. (If the
General Operating Permit does not include all applicable requirements against
a unit(s), that unit(s) shall be required to apply to be covered by another
federal operating permit.) 

Sections 122.231 and 122.233 also address situations in which the permit
may be reopened and the procedures that reopening must follow if there were
any new applicable requirements that become applicable, if there was a material
mistake in the permit, or if there were inaccurate statements made in 
establishing
the emissions standards or other terms and conditions of the permit. If there
are any omissions of applicable requirements from the General Operating Permit,
the commission will work expeditiously to codify these missing requirements.
TMOGA stated that neither the preamble nor the permits themselves address
the applicability of these permits to sites located in state waters under
the jurisdiction of TNRCC. Absent any information to the contrary, industry
assumes that these permits will be applicable to those sites and requested
TNRCC to confirm this in the response to comments. 

The commission agrees with the comment. The commission's position is that
major sources of emissions that lie in the territorial waters of the State
of Texas are subject to the requirements of 30 TAC Chapter 122. In addition,
major sources in State waters are subject to the same qualification criteria
as any other major source requesting authority to operate under a General
Operating Permit. 

TMOGA stated that these permits are proposed for promulgation in a new
Subchapter F in 30 TAC Chapter 122, as permits by rule. Chapter 122, in 
sec.122.202(b),
refers to a General Permit List which shall be filed in the Secretary of
State's Office. This situation is somewhat akin to the treatment of the current
standard exemption list. Chapter 122 does not appear to anticipate permits
by rule. Absent a clear linkage, industry is concerned that these permits
will have no clear legal meaning because they do not--on their face--state
that they are the alternatives to site operating permits described in 
sec.122.202.
Industry requested that the commission address, in the response to comments,
its understanding of the legal meaning of these permits. 

The commission has legal authority to issue General Operating Permits.
Qualifications for a General Operating Permit must satisfy the requirements
for site operating permits and are, therefore, a suitable and acceptable
alternative and satisfy the requirement to operate with a Title V permit
implemented through 30 TAC Chapter 122. 

Natural Gas Pipeline of America (NGPA) requested an extension of the comment
period due to the complexity of the proposed rule. 

Industry has been integrally involved throughout the development of the
General Operating Permits. Additional time for the comment period was already
included in the setting of the July 19, 1996, close of comment period deadline,
and any delays in the adoption of the rule proposal would not be beneficial
for the agency or the regulated community. The request is respectfully denied
as a result. 

Comments on the Preamble's Interpretations.
EPA confirmed that the following preliminary determinations made by the 
commission
are acceptable: issue numbers 1, 2, 3, 6, 8, 9, 10, 11, 13, 14, 15, 16, 17,
19, 20, 22, 25, 26, 28, 29, 30, 31, and 32. 

The commission appreciates the opportunity to clarify these issues with
the assistance of EPA input. 

EPA stated that the preliminary determination for issue number 4 by the
commission is acceptable, as long as the depressurization of the compressor
really is an infrequent maintenance activity. 

The commission agrees with the commenter. If depressurization of a compressor
is done for start-up, shutdown, or maintenance purposes in accordance with
sec.101.7, the depressurization would be exempt from sec.sec.115.121-115.125.
Notification is submitted through the appropriate TNRCC regional office and
to local air pollution control agencies (as applicable). 

EPA stated that for the preliminary determination for issue number 5, a
typical flare, as described, would not be a direct-flame incinerator. 

The final determination has been modified to address EPA's comments.  
EPA stated that the preliminary determination for issue number 7 is acceptable,
except that the exemptions listed in sec.115.137(a)(3) and (c)(4) have
not yet been approved by the EPA. EPA intends to approve these regulations
by the end of 1997. 

The commission is aware that these citations have not been approved as
part of the State Implementation Plan (SIP). The commission will retain the
codification of the exemptions in the General Operating Permits with the
understanding that the EPA may not approve the exemptions as part of the
SIP. 

EPA requested that the commission clarify that for issue number 12, sources
which have an exhaust gas flow rate greater than 100,000 actual cubic feet
per minute (acfm) are subject to sec.111.111(a)(1)(C). 

The sources that are subject to sec.111.111(a)(1)(C) which have exhaust
gas flowrates greater than 100,000 acfm have the applicable requirements
codified for them in sec.sec.122.511(c)(10), 122.512(c)(9), 122.513(c)(9),
122.514(c)(8), and 122.515(c)(8). These permit tables list the 
sec.111.111(a)(1)(C)
requirements.  

EPA stated that the preliminary determination for issue number 18 is not
in accordance with 40 CFR 60, Subpart LLL, specifically sec.60.640(b).
EPA declared that the owner or operator of such a source would still be required
to meet the sulfur dioxide reduction efficiencies listed in sec.60.642(a)
and (b). 

The commission agrees with the EPA's comments. The final determination
has been modified to address EPA's concerns. Any unit, regardless of design
capacity, which commenced construction or modification after January 20,
1984, has to comply with 40 CFR 60, Subpart LLL per the rule language in
sec.60.640(a). Units with a design capacity ≥ 2.0 long tons per day
LTPD shall comply with applicable monitoring, testing, recordkeeping, and
reporting requirements stated in Subpart LLL. Subpart LLL does not differentiate
according to operating capacity, and exemptions from control requirements
are based upon design capacity.  

Certification requirements are identified in sec.60.647(c). However,
the rule discusses certification requirements for units with design capacity
<2.0 LTPD, not for units that are operating with a capacity of <2.0
LTPD. Units with a design capacity of ≥ 2.0 LTPD, but operating with a
capacity of <2.0 LTPD, must comply with applicable monitoring, testing,
recordkeeping, and reporting requirements stated in Subpart LLL. However,
the facility may establish a federally enforceable operating capacity by
one of the following two options. 

Option 1. The facility may limit its sulfur feed rate in a Title V federal
operating permit and make this limit federally enforceable. There will be
monitoring and recordkeeping requirements placed into the permit to ensure
compliance with the federally enforceable sulfur feed rate. 

Option 2. An owner or operator may physically change the design capacity
of a gas sweetening to <2.0 LTPD (e.g., putting a flow restrictor into
the inlet of the gas sweetening unit) and demonstrate that the new design
capacity is <2.0 LTPD. In that case, the only requirement will be 
sec.60.647(c)
and there will be no other monitoring or recordkeeping requirements. 

For issue number 21, EPA questioned if the exemption should only be available
for those incinerators which are not associated with any of the units regulated
by Chapter 112. Even if not, EPA asked if the incinerator should be subject
to sec.112.3 and sec.112.4 for net ground level effects. 

The final determination addresses EPA's comment. Please refer to the final
determination for issue number 21 for further clarification. In addition,
net ground level effects are not applicable requirements for the Texas Federal
Operating Permits Program as defined in sec.122.10, and would not need
to be codified in the General Operating Permit. 

For issue number 23, EPA stated that the preliminary determination is not
in accordance with 40 CFR 60, Subpart KKK, specifically sec.60.630 and
sec.60.631. EPA declared that the applicability of natural gas liquid extraction
facilities located at an onshore natural gas processing plant subject to
Subpart KKK is not dependent on the location, as long as the extraction 
facilities
are located "onshore" as defined in sec.60.631. 

The commission is in the process of developing a clear interpretation and
has taken the comment into evaluation for this topic. 

EPA questioned if the preliminary determination for issue number 24 contradicted
issue number 21, and asked if these units are exempt from Chapter 112 in
the determination for issue number 21. 

Based upon the final determination for issue number 21 (addressing whether
an incinerator may be defined as a furnace and under what circumstances),
the determination for issue number 24 (pertaining to the determination of
the applicability of sec.112.7 when combusting a sulfur recovery unit's
waste gas stream) does not contradict the determination for issue number
21.  

EPA stated that the preliminary determination for issue number 27 is acceptable.
However, EPA stated that a clarification of the construction date is needed
and provided guidance on this issue. EPA also provided guidance concerning
40 CFR 60, Subpart GG as it relates to gas turbine manufacturers. 

The commission agrees with the comment. The final determination has been
revised based on EPA's comments on the General Operating Permits rulemaking.
Per sec.60.330(b) of Subpart GG, the date October 3, 1977, refers to the
date which construction, modification, or reconstruction of a stationary
gas turbine commenced. 

Commenced means that an owner or operator has undertaken a continuous program
of construction or modification or have entered into a contractual obligation
to undertake and complete, within a reasonable time, a continuous program
of construction or modification. The commission consulted with the staff
from EPA Region 6. The EPA concurred with this interpretation, and further
indicated that the commencement date also refers to the date when a construction
contract or purchase order (a contractual obligation) is signed by the affected
parties.  

For the purpose of determining the applicability of Subpart GG, the construction
date is interpreted to mean the earlier of: the fabrication, erection, or
installation of an affected facility; or the date upon which a contractual
obligation, such as a construction contract or a purchase order, is entered
into by both affected parties. 

Per EPA's comment on the General Operating Permits rule proposal, the date
of manufacture is usually not used for defining the "construction" date for
determining the applicability date of Subpart GG. The exception concerning
gas turbine manufacturers that EPA mentioned is not relevant to this rulemaking,
because gas turbine manufacturers are not allowed to use General Operating
Permits. 

TMOGA commented that interpretation number 4 is too narrowly focused. The
blowdown of compressors was not the only activity of concern that industry
representatives noted during work sessions to develop these general permits.
TMOGA suggested language to revise the interpretation. 

The final interpretation only addressed the issue of compressor 
depressurization.
A broad request of this nature is difficult to answer with specific guidance,
and generalities would only cause confusion in the regulated community; 
therefore,
case-by-case determinations on issues concerning maintenance or upset condition
activities must be made individually. If TMOGA would like an interpretation
of applicability for other specific activities
which occur during maintenance or upset conditions, it may make a request
to the commission to address these kinds of issues. 

TMOGA commented that interpretation number 5 does not appear to answer
the question posed of whether rules that apply to incinerators apply to flares.
Industry proposed that the rules should be interpreted such that a flare
is not a direct flame incinerator and is not subject to the rules that apply
to incinerators. 

The final determination agrees with TMOGA's comment. Please refer to the
final determination for issue number 5. 

TMOGA commented that for interpretation number 18, while industry agrees
with the interpretation proposed, a conversation with Jonathan York of EPA
on June 3, 1996 (Attachment #1 of TMOGA's comments) indicates that, in addition
to the requirements codified in sec.122.511(c)(5), the owner or operator
must certify a lower capacity for the unit if the unit cannot be operated
at design capacity. It is highly unlikely that the unit can be operated at
design capacity, since the reason for bypassing the sulfur unit that the
supply of sour natural gas (which determines the actual sulfur feed rate)
is insufficient due to declining gas production or market cutbacks. Therefore,
industry recommended that the general permit be revised to include a requirement
for recertification in the general provision section in sec.sec.122.511-122.514
and industry suggested wording. 

Industry recommended citing 40 CFR sec.60.647(c), since it outlines the
requirements for certifying. Since 40 CFR sec.60.647(c) does not directly
apply to this situation (it addresses situations where the original 
intended design capacity is less than 2.0 long tons
per day), it is recommended that this citation not be included in the table
at sec.122.511(c)(5), but rather in the general provision section of the
permit. 

The commission understands the basis for the TMOGA comment, but disagrees
with the requested change. Any unit, regardless of design capacity, which
commenced construction or modification after January 20, 1984, has to comply
with 40 CFR 60, Subpart LLL per the rule language in sec.60.640(a). Units
with a design capacity ≥ 2.0 LTPD shall comply with applicable monitoring,
testing, recordkeeping, and reporting requirements stated in Subpart LLL.
Subpart LLL does not differentiate according to operating capacity, and 
exemptions
from control requirements are based upon design capacity. 

Certification requirements are identified in sec.60.647(c). However,
the rule discusses certification requirements for units with design capacity
<2.0 LTPD, not for units that are operating with a capacity of <2.0
LTPD. Units with a design capacity of ≥ 2.0 LTPD but operating with a
capacity of <2.0 LTPD, must comply with applicable monitoring, testing,
recordkeeping, and reporting requirements stated in Subpart LLL. However,
the facility may establish a federally enforceable operating capacity by
one of the following two options. 

Option 1. The facility may limit its sulfur feed rate in a Title V federal
operating permit and make this limit federally enforceable. There will be
monitoring and recordkeeping requirements placed into the permit to ensure
compliance with the federally enforceable sulfur feed rate. 

Option 2. An owner or operator may physically change the design capacity
of a gas sweetening to <2.0 LTPD (e.g., putting a flow restrictor into
the inlet of the gas sweetening unit) and demonstrate that the new design
capacity is <2.0 LTPD. In that case, the only requirement will be 
sec.60.647(c)
and there will be no other monitoring or recordkeeping requirements. 

TMOGA commented that for interpretation number 20, based on the preamble
to the EPA final rule regarding New Source Performance Standards (NSPS) for
turbines, industry believes that the interpretation presented should be modified
to read, "Pipeline turbines located in a Metropolitan Statistical Area and
all industrial turbines with heat inputs...." The qualifier "located in a
Metropolitan Statistical Area" applies only to pipeline turbines, not to
all industrial turbines. At 47 FR 3767, EPA says, "The proposed revision...would
have rescinded the NOtype-name="sub">x emission limit...for:
industrial gas turbines having a heat input greater than 107.2 gigajoules
per hour (100 million BTU/hr or approximately 7.5 MW); and pipeline gas turbines
in metropolitan areas with a heat input greater than 107.2 gigajoules per
hour." 

Industry respectfully requested that the interpretation and the permit
tables in sec.sec.122.511(c)(1), 122.512(c)(1), 122.513(c)(1), and 122.514(c)(1)
be revised accordingly. 

The commission understands the basis for the TMOGA comment; the final 
determination
has been worded to clarify the preliminary determination, and the permit
tables have been revised accordingly. 

TMOGA commented that for interpretation number 23, 40 CFR 60, Subpart KKK,
defines a natural gas processing plant (gas plant) as "any processing site
engaged in the extraction of natural gas liquids from field gas, fractionation
of mixed natural gas liquids to natural gas products, or both." Proposed
rule interpretation number 23 broadens the Subpart KKK definition of a gas
plant so that it could be read to include facilities that are not gas plants.
Proposed rule interpretation number 23 would include in the definition
"those sites which remove natural gas liquids from feedstock gas or that
separate mixed gas liquids into gas products." The interpretation attempts
to clarify that production sites engaged in extraction of liquids without
fractionation are not gas plants; however, the interpretation uses terms
not in Subpart KKK (such as removal and separation), and uses some terms
differently (such as excluding facilities that "extract without fractionation").
The TNRCC interpretation should conform to, not conflict with, Subpart KKK.
A review of the preamble to Subpart KKK shows that EPA chose to define
natural gas processing as extraction and/or fractionation of natural gas
liquids. Proposed Subpart KKK defined natural gas processing as "separation,"
but the agency changed this term to "extraction" in the final regulations
in order "to exclude facilities that remove liquids from field gas by means
other than a forced process (e.g., gravity or natural condensation)." As
additional support, the TNRCC bulletin board contains prior rule 
interpretations,
including one dated June 25, 1985, from Sam Crowther that states "please
do not regard an oil and gas production separator or a tank battery as a
gas processing plant subject to Subpart KKK." 

The correct rule interpretation is that a natural gas processing plant
as it relates to 40 CFR 60, Subpart KKK is any processing site engaged in
the extraction of natural liquids from field gas, fractionation of mixed
natural gas liquids to natural gas products, or both, and excludes facilities
that remove liquids from field gas by means other than a forced process (e.g.,
excludes gravity or natural condensation). 

The commission is in the process of developing a clear interpretation and
has taken the comment into evaluation for this topic. 

TMOGA commented that interpretation number 26 infers that unapproved alternative
means of compliance might be permitted in the General Operating Permit. Such
an action is specifically precluded under the Qualification Criteria in 
subsection
(a)(2) of each of the five proposed permits. However, alternative control
methods for vent gas control are allowed by sec.115.123 and do not require
Executive Director approval if they meet the required efficiency criteria
specified in sec.115.122. Therefore, TMOGA suggested that this interpretation
should be revised. 

The commission agrees with the comment. The final determination has incorporated
this clarification and refers to the Vent Gas Control rules in sec.sec.115.121-
115.129,
which include the alternative control requirements of sec.115.123. 

TMOGA commented that it disagrees with interpretation number 27, since
it suggests that a turbine which predates NSPS and is relocated ("installed
on-site") but not modified, could become subject to NSPS. This conflicts
with 40 CFR sec.60.14(e)(6), which states that "the relocation or change
in ownership of an existing facility" shall not, by itself be considered
a modification and therefore subject to NSPS. In addition, EPA issued an
opinion dated April 15, 1980, by Edward E. Reich (Attachment #2 of TMOGA's
comments) in response to the following question: "At what point in time will
NSPS regulations apply to sources such as prefabricated internal combustion
engines, where the source, after being manufactured, may lie on the shelf
before being bought and used"?  

EPA's response was: "...the initial owner/operator is considered to be
the original manufacturer, since it is the manufacturer rather than the ultimate
user who is responsible for construction of the engines. The regulation will
apply to internal combustion engines for which construction commences on
or after the effective date of the regulations." 

The only exception to this interpretation of which TMOGA is aware is an
EPA interpretation issued April 4, 1978 by Edward E. Reich (Attachment #3
of TMOGA's comments), which states that 40 CFR sec.60.2(i) allows for the
situation in which an owner or operator has entered into a contractual 
obligation
to undertake and complete, within a reasonable time, a continuous program
of construction or modification. If the source was constructed after the
applicable date of the regulations, but under a contract which commenced
prior to that date, the source is not subject to the regulation provided
that the primary purpose of the contract was not to circumvent the applicability
of NSPS. While the commission's interpretation attempts to capture this 
exception,
TMOGA recommended that it be clarified. Industry respectfully requested that
the interpretation be reworded. 

The commission disagrees with the comment. The final determination has
been revised based on EPA's comments on the General Operating Permits 
rulemaking.
Per sec.60.330(b) of Subpart GG, the date October 3, 1977, refers to the
date which construction, modification, or reconstruction of a stationary
gas turbine commenced. 

Commenced means that an owner or operator has undertaken a continuous program
of construction or modification or has entered into a contractual obligation
to undertake and complete, within a reasonable time, a continuous program
of construction or modification. The commission consulted with the staff
from EPA Region 6. The EPA concurred with this interpretation, and further
indicated that the commencement date also refers to the date when a construction
contract or purchase order (a contractual obligation) is signed by the affected
parties.  

For the purpose of determining the applicability of Subpart GG, the construction
date is interpreted to mean the earlier of: the fabrication, erection, or
installation of an affected facility; or the date upon which a contractual
obligation, such as a construction contract or a purchase order, is entered
into by both affected parties. 

Per EPA's comment on the General Operating Permits rule proposal, the date
of manufacture is usually not used for defining the "construction" date for
determining the applicability date of Subpart GG. The exception that EPA
mentioned is not relevant to this rulemaking, because gas turbine manufacturers
are not allowed to use General Operating Permits. 

TMOGA also commented that for interpretation number 27, should additional
question arise regarding the applicability of NSPS Dc, K, Ka and Kb, which
are also codified in these permits, it is clear that the EPA interpretation
for internal combustion engines would also apply to steam generators and
storage vessels, such that generators or storage vessels that predate NSPS
and are simply relocated are not subsequently subject to NSPS. 

The commission understands the basis for the comment. A final determination
has been made for the construction date described in 40 CFR 60, Subpart GG
in sec.60.330(b) for issue number 27. Requests may be made to the agency
for a rule interpretation of other various 40 CFR 60 Subparts. 

TMOGA requested an additional interpretation: during the work sessions
to develop the general permit, industry identified potential confusion in
the interpretation of sec.115.217(a)(10)(D). Informal discussions with
agency staff indicated that the intent in promulgating this section was that
sec.115.217(a)(10)(D) only applies to non-dedicated loading lines at marine
terminals and not at any other locations. Industry requested that in the
commission's response to comments, the agency issue an interpretation that
concurs or explains the proper interpretation of this citation. 

The commission addressed this request and made the determination that the
"non-dedicated loading lines" referenced in sec.115.217(a)(10)(D) pertain 
only to marine terminals, and not to just any non-dedicated
loading line. 

NGPA stated that the preliminary determinations and permit tables would
require NGPA to review and determine applicability to the federal and state
standards. NGPA stated that the proposed rule needs to ensure that any 
additional
requirements are federally enforceable to maintain the goal of the general
operating permit. 

The commission understands the commenter's position and maintains that
meeting the need of federally enforceability for existing and future 
requirements
is a top priority in the development of these General Operating Permits by
the commission. 

Qualification Criteria Comments. EPA commented
that the commission should clarify that the reference in the qualification
criteria in subsection (a)(3) in each General Operating Permit to subsections
(b) and (c) requires compliance with all applicable requirements, including
preconstruction permits. 

The only preconstruction authorizations that are applicable requirements
for the Texas Interim Federal Operating Permits Program are those implementing
Nonattainment (NA) and Prevention of Significant Deterioration (PSD) provisions.
Units covered by these NA or PSD provisions are not eligible to be covered
by the General Operating Permits. A unit covered by an NA or PSD permit will
have to apply to be covered by a site operating permit for Title V compliance
purposes, and will have to comply with its site operating permit as well
as the NA or PSD permit provisions. 

EPA commented that the commission should clarify the qualifier "of this
section" in the qualification criteria in subsection (a)(3) in each general
operating permit to make it clear that it means "of this permit." 

For these rules, based on Texas Register
guidelines, "of this section" in rulemaking language means "of this permit"
in laymen's terms. 

EPA requested that a more explicit statement of the qualification criteria
for boilers and steam generators firing only
natural gas fuel be made in the qualification criteria concerning these types
of emission units. 

The permit tables correctly codified the requirements against boilers and
steam generators affected by 40 CFR 60, Subparts Db and Dc. As a result of
a separate comment by TMOGA, due to the infrequent firing of liquid fuel
in these emission units, the commission is deleting the liquid fuel firing
requirements from the appropriate permit tables and revising the qualification
criteria to allow only natural gas fired
boilers and steam generators. 

EPA requested that in the qualification criteria for boilers and steam
generators subject to 40 CFR 60, Subparts D, Da, Db, or Dc, the phrase "natural
gas" should be restated as "100 percent pipeline quality natural gas" to
eliminate mixtures containing other kinds of fuel from the qualification
criteria.  

The commission disagrees with the commenter. The definition of natural
gas in 40 CFR 60, Subpart Db in sec.60.41b states, "(1) a naturally occurring
mixture of hydrocarbon and nonhydrocarbon gases found in geologic formations
beneath the earth's surface, of which the principal constituent is methane;
or (2) liquid petroleum gas, as defined by the American Society for Testing
and Materials in ASTM D1835-82, Standard Specification for Liquid Petroleum
Gases.'" Subpart Dc also uses a similar definition. The definition that EPA
proposes is actually more stringent than that used in the qualification 
criteria,
and to retain consistency with the 40 CFR 60, Subparts D, Da, Db, or Dc rules,
the qualification criteria's use of the term "natural gas" will remain the
same. 

EPA requested that in the qualification criteria for stationary gas turbines,
the phrase "pipeline quality natural gas" should be restated as "100 percent
pipeline quality natural gas" to eliminate fuel mixtures containing other
kinds of fuel from the qualification criteria for turbines. EPA also stated
that it should made clear that the general permit is not available if fuels
and fuel mixtures other than 100% pipeline quality natural gas are fired
in the turbine. 

The commission disagrees with this request, since "natural gas" or "pipeline
quality natural gas" is not defined in 40 CFR 60, Subpart GG, even though
the term "natural gas" is used in the Subpart. In its common usage at pipeline
compressor stations and other oil and gas field locations, the two terms
"pipeline quality natural gas" and "100 percent pipeline quality natural
gas" generally mean the same thing, especially with respect to the fuel sulfur
content. Emergency fuels are excluded from being fired in the turbines; the
turbines expected to be covered by these General Operating Permits only burn
"pipeline quality natural gas," otherwise they would not be able to meet
the testing requirements for sulfur content in the fuel. 

EPA requested that the stationary gas turbine qualification criteria pertaining
to gas turbine size criteria be revised to be in a range format to be consistent
with the associated permit table (e.g., sec.122.511(c)(1)). This would
make the range format more consistent with the nitrogen oxides emission standard
applicability criteria of 40 CFR 60, Subpart GG. 

The commission agrees with the commenter. The qualification criteria relating
to stationary gas turbines greater than 100 MMBtu/hr has been deleted, so
that the stationary gas turbine size criteria codified in the General Operating
Permits are consistent with the regulatory language of 40 CFR 60, Subpart
GG. 

EPA requested that the term "reservoir" also be included in the list of
allowed devices to be covered by the general operating permit in sec.122.515,
since this emission unit is regulated by 40 CFR 60, Subparts K, Ka, and Kb.
The commission did not include this term because only tanks, containers,
and storage vessels are meant to be covered by this General Operating Permit,
since these three terms are the ones in most common usage in the field of
air pollution control for these types of emission units at these types of
facilities. 40 CFR 60, Subparts K, Ka, and Kb define "storage vessel" and
use the term "reservoir" in this definition, although "reservoir" itself
is not defined. Chapter 115 does not define "reservoir" either. However,
if a bulk fuel storage terminal applying to be covered by a General Operating
Permit were to have a "reservoir" as an emission unit, as long as all of
its applicable requirements are codified in the General Operating Permit,
the inclusion of the unit in the General Operating Permit is allowable, 
regardless
of the term used to describe it. 

An individual requested that in sec.122.511(a)(4), the tank size of 8,000
gallons (gal) as listed in the qualification criteria be changed to 5,000
gal because of the effects of hydrocarbon emissions on the ozone nonattainment
area. 

The qualification criteria in subsection (a) of each proposed section are
based on a combination of the applicability thresholds of existing applicable
requirements and the exclusion of certain emission units based on the difficulty
of codifying all of their potentially applicable requirements without apparent
benefit to the regulated community. Since the Texas Federal Operating Permits
Program is designed to codify the applicable requirements that apply to the
emission units (as defined in sec.122.10), the revisions suggested by the
commenter cannot be made to those applicable requirements through this 
rulemaking.
An individual requested that in sec.122.511(a)(5), the 1,100 tons per
year (tpy) threshold for equipment in benzene service as listed in the 
qualification
criteria should be changed to 100 tpy because of the effects of hydrocarbon
emissions on the ozone nonattainment area and also since benzene is a 
carcinogen.
See the response to the preceding comment on sec.122.511(a)(4). 

An individual requested that in sec.122.511(a)(7), the vapor pressure
threshold should be changed from 11.0 pounds per square inch absolute (psia)
to 7.0 psia to maximize volatile organic compound (VOC) emission reductions
in ozone nonattainment areas. 

See the response to the preceding comment on sec.122.511(a)(4). 

An individual requested that in sec.122.511(a)(9)(D), (E), and (F), the
vapor pressure threshold should be changed to 7.0 psia to maximize VOC emission
reductions to lower ozone levels in the Houston ozone nonattainment area.
See the response to the preceding comment on sec.122.511(a)(4). 

An individual requested that in sec.122.511(a)(9)(D), (E), and (F), the
tank storage capacity should be lowered to 10,000 gal to maximize VOC emission
reductions to lower ozone levels in the Houston ozone nonattainment area.
See the response to the preceding comment on sec.122.511(a)(4). 

An individual requested that in sec.122.511(a)(10)(A), the threshold
for the heat input rating for boilers and steam generators should be lowered
to reduce nitrogen oxides emissions. 

See the response to the preceding comment on sec.122.511(a)(4). 

An individual requested that in sec.122.511(a)(18), all loading of VOCs
containing benzene should not be eligible for general operating permits because
of the effects of hydrocarbon emissions on the ozone nonattainment area and
also since benzene is a carcinogen. 

See the response to the preceding comment on sec.122.511(a)(4). 

An individual objected to the allowance of surface coating operations at
all facilities without meeting a standard exemption in sec.122.511(a)(19).
Surface coating operations, as described in sec.122.511(a)(19), must
comply with the exemption criteria as stipulated in sec.115.427(a)(3)(A)
and the recordkeeping requirements per sec.115.426(a)(4) because of their
location in an ozone nonattainment area. As a point of information, Standard
Exemption 75 requires that the owner or operator must also be in compliance
with the requirements of Chapter 115 in Subchapter E, concerning surface
coating processes if the facility is located in an ozone nonattainment area.
It must also be noted that Standard Exemptions promulgated as part of 30
TAC Chapter 116 are outside of the scope of this rulemaking. 

TMOGA stated that it fully supports the inclusion of the qualification
criteria, although they appear to be lengthy, since they are necessary to
keep the permits as streamlined as possible. 

The qualification criteria were established to optimize the inclusion of
a large number of emission units which could be covered by the General Operating
Permit, while minimizing the complexity of the permit tables. This is why
certain qualification criteria, such as the exclusion of solid fuel fired
boilers and steam generators from coverage by the General Operating Permit,
were stipulated as such. Also, see the response to the eighth comment under
the heading addressing Qualification Criteria Comments. 

TMOGA commented that in the preamble, the commission requested comments
on sec.122.511(c)(6) for Process Heaters/Furnaces that fire liquid fuel.
TMOGA said that it is rare for operators in their industry to use liquid
fuel to fire these units. TMOGA suggested deleting the contents of 
sec.sec.122.511(c)(8),
122.512(c)(7), 122.513(c)(7), and 122.514(c)(6) and marking these paragraphs
as "reserved" to avoid renumbering the index numbers on subsequent paragraph
tables. As a result, TMOGA suggested wording for a qualification criteria
to address its concern. 

The commission understands the basis for the comment and has revised the
appropriate permit tables and qualification criteria accordingly. It must
be noted, though, that the deletion of the requested permit tables did 
necessitate
the renumbering of the subsequent permit tables and their index numbers,
since the Texas Register does not allow paragraphs
to be "reserved." 

TMOGA commented that in the preamble, the commission requested comments
on sec.122.511(c)(16) for Boilers/Steam Generators that fire liquid fuel.
TMOGA said that it is rare for operators in its industry to use liquid fuel
to fire these units. TMOGA suggested deleting the provisions of Chapter 112
from sec.sec.122.511(c)(16), 122.512(c)(14), 122.513(c)(14), and 122.514(c)(12)
and suggested wording for a qualification criteria to address its concern.
The commission understands the basis for the comment and has revised the
appropriate permit tables and qualification criteria accordingly. 

TMOGA requested that the commission modify the qualification criteria to
stipulate that the use of custom fuel monitoring schedules to comply with
NSPS GG, as allowed by 40 CFR sec.60.334(b)(2), not be considered an alternative
monitoring method which would disqualify them from using the General Operating
Permit. The proposed permits provide only for the custom fuel monitoring
schedule proposed in sec.122.511(b)(13) or a more stringent version. Sources
which have already received an EPA approved schedule or are in the approval
process should not be disqualified from using the General Operating Permit,
nor should they have to modify EPA approved custom schedules that might deviate
slightly from the schedule proposed in this permit. TMOGA suggested that
sec.sec.122.511(a)(2), 122.512(a)(2), 122.513(a)(2), and 122.514(a)(2)
be revised and included its suggested language. 

The commission does not agree that the recommended changes should be made.
The custom fuel monitoring schedule that was proposed in June 4, 1996, issue
of the Texas Register (21 TexReg 4955) was
based on provisions from other custom fuel monitoring schedules that, in
the past, have been submitted by industry and authorized by EPA. The revised
schedule, as adopted (which includes changes based on EPA's comments), is
still reasonable for a unit requesting to be authorized under a General 
Operating
Permit. By the inclusion of this custom fuel monitoring schedule in the proposed
rule, the commission fulfilled its obligation to provide the public and EPA
with the opportunity to comment. An owner or operator who requests to utilize
a custom fuel monitoring schedule that is less stringent than the one included
in the adopted sections should include that unit in an application for another
type of federal operating permit. 

TMOGA mentioned that it also has concerns about whether the commission
possesses the statutory authority to grant sources the permission to conduct
custom fuel monitoring. This authority currently seems to reside only with
EPA and cannot be delegated by the commission via these general permits.
Industry recommended revising proposed sec.sec.122.511(b)(13), 122.512(b)(10),
122.513(b)(10), and 122.514(b)(10) and included the suggested language. 
The commission disagrees with making the proposed revisions. The custom
fuel monitoring schedule that was proposed in June 4, 1996, issue of the 
Texas Register rule was accepted by EPA, contingent
upon the inclusion of three additional requirements. The commission modified
the custom fuel monitoring schedule provisions based on EPA's comments 
pertaining
to initial fuel sampling during startup, fuel supplier information, and fuel
sampling requirements after a change in the fuel supply. 

TMOGA stated, as proposed, sec.sec.122.511(a)(11)(D), 122.512(a)(11)(D),
122.513(a)(11)(D), and 122.514(a)(8)(D) may lead to confusion in the regulated
community. TMOGA recommended language for the sake of clarity. 

The commission disagrees with the commenter because as a matter of convention,
each general provision in subsection (b) of each referenced section relating
to stationary gas turbines stipulates compliance 
only with sec.60.333(b). Therefore, the requested qualification
is unnecessary. 

TMOGA stated that proposed sec.122.512(a)(4) and sec.122.513(a)(4)
(prohibiting degassing and cleaning of VOC transport vessels with a capacity
greater than 8,000 gallons) should be deleted as the underlying regulation,
sec.sec.115.541-115.546, is not applicable to the counties covered by
these general permits. The regulation is only applicable to the counties
covered by proposed sec.122.511. 

The commission agrees with the commenter and deleted the qualification
criteria as suggested. 

TMOGA stated that proposed sec.122.511(a)(15) should be revised to exclude
a reference to sec.115.121(a)(4) and sec.115.122(a)(3), since these regulations
pertain to bakeries and are not applicable to sources that would use this
permit. 

The qualification criteria in sec.122.511(a)(15) does not reference 
sec.115.121(a)(4)
and sec.115.122(a)(3). However, sec.122.511(a)(16), which relates to
process vents, does contain a reference to these two sections. The commission
agrees that the requirements of sec.122.511(a)(16) need to be revised,
since emissions from bakeries are not covered in this section; no changes
are needed to sec.122.511(a)(15).  

General Provision Comments. EPA stated that
it is not clear why emission units subject to 40 CFR 60, Subpart GG shall
only comply with sec.60.333(b). EPA then stated that if a stationary gas
turbine is subject to the requirements of Subpart GG, then the owner or operator
must comply with all of the requirements of Subpart GG. EPA requested that
the public record reflect that the general operating permit address all 
applicable
requirements in Subpart GG for sources subject to Subpart GG. 

The qualification criteria in sec.122.511(a)(11)(D), 
et al, states that the owner or operator shall not use sec.60.333(a)
as a means to comply with 40 CFR 60, Subpart GG. The general provision in
sec.122.511(b)(12), et al, requires the
owner or operator to only comply with sec.60.333(b). The provision in sec.60.333
states that the owner or operator must comply with either sec.60.333(a) 
or sec.60.333(b). Since the pertinent general
provision requires the owner or operator to comply with sec.60.333(b) and
the pertinent qualification criteria states that the owner or operator cannot
comply with sec.60.333(a), the standard in sec.60.333(a) is not a relevant
standard for General Operating Permits purposes. The General Operating Permit,
therefore, addresses all of the pertinent applicable requirements contained
in Subpart GG. 

EPA requested that the general provision in subsection (b)(2) of each section
dealing with major upsets be changed to require that notice of the emergency
be sent within two working days. In the event that the State does not make
this change during the interim status period, the State would be required
to revise the program as specified in the June 25, 1996, 
Federal Register notice. 

The commission is continuing to work with EPA on resolution of this issue
and will address the major upset notification requirements for approval of
the full program. 

EPA stated that in the general provisions relating to Title VI, the commission
has authority to issue permits that assure compliance with all applicable
requirements, including Title VI stratospheric
ozone conditions. EPA asked that the phrase "enforceable only by the 
Administrator
of the EPA" be deleted from the general provisions of each general operating
permit as a result. 

The commission disagrees with the proposed change. Currently, the commission
does not have, nor is requesting delegation of, Title VI Stratospheric Ozone
Protection. Therefore, Title VI is a requirement that is enforceable 
only by the Administrator of the EPA. Since Title
VI is an applicable requirement under the provisions of 30 TAC Chapter 122,
a provision addressing it will be included in each General Operating Permit.
This provision correctly references EPA's enforceability of the Title VI
requirements.  

EPA requested that in the general provisions relating to Title VI, the
term "non-motor vehicle air conditioning equipment" be revised to say "non-motor
vehicle air conditioning appliances" because the word "equipment" is usually
used to designate the devices used to recover the refrigerant, not to designate
the devices from which the refrigerant is to be recovered. 

The commission agrees with the commenter and revised the language as suggested.
EPA requested that in the general provisions relating to Title VI, the
phrase "using approved equipment" be added after the phrase "only by properly
certified technicians," because the applicable regulations require the equipment
to be approved for use using specific procedures. 

The commission agrees with the commenter and revised the language as suggested.
EPA requested that the commission should clarify for the public record
that by the responsible official or designee signing the annual compliance
certification includes compliance with the Risk Management Plan requirements
specified in the 1990 Federal Clean Air Act Amendments, 112(r). 

The commission agrees with the commenter. When the responsible official
or designee signs the annual compliance certification for the Risk Management
Plan, it indicates compliance with the requirements of the Accidental Release
Prevention Provisions in Title 40, Code of Federal Regulations, Part 68 (40
CFR 68). 

EPA stated that in the general provisions relating to Risk Management Plan
in 112(r), the commission has authority to issue permits that assure compliance
with all applicable requirements, including the Risk Management Plan. EPA
asked that the phrase "enforceable only by the Administrator of the EPA"
be deleted from the general provisions of each general operating permit and
the following notation be used "upon delegation to the State the provision
is enforceable" by both parties. 

The commission disagrees with the proposed change. Currently, the commission
does not have, nor is requesting delegation of, the 112(r) provisions relating
to the Risk Management Plan. Therefore, the Risk Management Plan is a 
requirement
that is enforceable only by the Administrator
of the EPA. Since the Risk Management Plan is an applicable requirement under
the provisions of 30 TAC Chapter 122, a provision addressing it will be included
in each General Operating Permit. This provision correctly references EPA's
enforceability of the Risk Management Plan requirements. 

EPA requested that the following 40 CFR 60, Subpart A provisions be added
to the general provisions of each general operating permit for proper 
implementation
and enforcement of the 40 CFR 60 rules where applicable: sec.60.2, Definitions,
sec.60.3, Units and Abbreviations, sec.60.17, Incorporation by Reference,
and sec.60.18, General Control Device Requirements. 

The commission disagrees with the commenter. Sections 60.2, 60.3, and 60.17
referenced by EPA are only for informational purposes. The contents of these
sections contain no enforceable requirements; therefore, it is not necessary
to codify them in the General Operating Permit. It must be noted that the
requirements of sec.60.18 (as it pertains to flares) have been codified
in a permit table in each of the General Operating Permits. 

In the general provisions relating to stationary gas turbines affected
by 40 CFR 60, Subpart GG, arrangements for a custom fuel monitoring plan
were allowed. EPA agreed, provided that the owner or operator of the affected
stationary gas turbine meets three criteria that were listed in EPA's comments.
The commission modified the custom fuel monitoring schedule provisions
based on EPA's comments pertaining to initial fuel sampling during startup,
fuel supplier information, and fuel sampling requirements after a change
in the fuel supply. 

An individual requested that in sec.122.511(b)(7)(A), (C), and (E), the
opacity limit be lowered from 30% to 20% for visible emissions from stationary
vents, structures, and all other sources not specified. 

The emission limits codified in the General Operating Permits are those
from existing State and federal rules that meet the definition of applicable
requirements as defined in sec.122.10. Since the General Operating Permits
are not amending the underlying rules, there is no legal method for this
rulemaking to revise and lower the opacity limits set forth in Chapter 111.
An individual objected to the allowance of surface coating operations in
ozone nonattainment areas without meeting a standard exemption in 
sec.122.511(b)(15).
See the response to the preceding comment on sec.122.511(a)(19) under
the heading addressing Qualification Criteria Comments. 

TMOGA stated that the intent of proposed sec.sec.122.511(b)(3), 122.512(b)(3),
122.513(b)(3), 122.514(b)(3), and 122.515(b)(3) was to provide for emission
units whose applicable requirements were intentionally not codified in this
general permit. As written, proposed sec.122.511(b)(3) 
et al could also be interpreted to include inadvertent omissions.
TMOGA recommended language to allow for inadvertent omissions. 

The commission disagrees with the commenter. Please refer to the previous
TMOGA comment concerning noncompliance with unintentional omissions under
the heading addressing Comments in General. 

TMOGA stated that the requirement for the submission of annual compliance
certifications in sec.sec.122.511(b)(5), 122.512(b)(5), 122.513(b)(5),
122.514(b)(5), and 122.515(b)(5) is already stated in sec.122.143(4). TMOGA
recommended deleting this redundant requirement from sec.sec.122.511-122.515,
because inclusion could create confusion as to why other terms and conditions
in sec.122.143 are not also repeated in each permit. 

The commission agrees with the commenter that the submission of annual
compliance certifications required by sec.122.143(4) is repeated twice
in the General Operating Permits general provisions (sec.122.511(b)(2)
and (5), for example). This reiteration was done to avoid confusion about
this specific requirement and to clarify that an owner or operator with units
at a site covered by a General Operating Permit needs to submit annual 
compliance
certifications, the same as for owners or operators of units at sites covered
by site operating permits. 

TMOGA stated that on June 20, 1996 (after the publication of these proposed
permits), EPA issued its final rule on the Risk Management Program. At 40
CFR sec.68.215, EPA addresses the permit content and air permitting authority
or designated agency requirements. (See Attachment #4 of TMOGA's comments,
61 FR 31278). Upon review of these new regulations, TMOGA proposed that 
sec.sec.122.511(b)(8),
122.512(b)(7), 122.513(b)(7), 122.514(b)(7), and 122.515(b)(11) be revised
to conform to the new requirements and suggested language.

Industry felt this change is necessary due to the requirement at 40 CFR
sec.68.215(c) to revise or reopen permits that are issued prior to the
deadline for registering and submitting a risk management plan and do not
contain the permit conditions specified in 40 CFR sec.68.215(a). 

The commission has developed a new provision to replace the one found in
the sections mentioned in the comment. The new provision, although not the
same as the provision requested by the commenter, does satisfy the requirements
of 112(r). 

In addition, a reference to the owner or operator, indicating in the permit
application that Part 68 is an applicable requirement, was not included in
the new provision. This reference is not a pertinent statement to add to
the provision since Part 68 states, "the 40 CFR part 70 or part 71 permit
for the stationary source shall contain a statement listing this part as
an applicable requirement." It does not mention that the permit application
has to indicate that Part 68 is an applicable requirement. 

TMOGA stated that the proposed sec.sec.122.511(b)(9)(C), 122.512(b)(8)(C),
122.513(b)(8)(C), 122.514(b)(8)(C), and 122.515(b)(11) do not include the
50-pound exemption allowed by 40 CFR 82 and suggested language. 

The commission disagrees with making the requested change. However, because
of the approach taken throughout this rule proposal to codify on a high level
of citation applicable requirements that are only enforceable by the EPA,
subparagraph (C) has been deleted and the recordkeeping requirements contained
in it have been moved to subparagraphs (A) and (B). The recordkeeping 
requirements
in subparagraphs (A) and (B) now state that the owner or operator shall keep
records as required by the pertinent subpart. This revision will incorporate
the 50-pound threshold provision found in 40 CFR 82, Subpart F in sec.82.166(j)
and (k) that the commenter cites. Most importantly, it will still retain
all of the recordkeeping requirements that are required for Title VI as well.
TMOGA stated that these proposed permits inadvertently omitted a general
provision for asbestos NESHAP, 40 CFR 61, Subpart M for demolition and 
renovation
activities and suggested wording. 

The commission disagrees with the commenter. The demolition and renovation
portions of 40 CFR 61, Subpart M are not applicable requirements for the
sources which are eligible to be covered by these General Operating Permits.
Permit Table Comments in General. TMOGA strongly
recommended that the commission add a descriptive title (e.g., Gas Turbines
for sec.122.511(c)(1)) to each proposed table to aid in their use by the
regulated community. 

The commission agrees with the commenter and has implemented the request
to add a descriptive title to each permit table. 

Specific sec.122.511(c) Comments. In sec.122.511(c)(1),
EPA indicated that the exemption citation for Index Number 511-04-004 should
be sec.60.332(e). 

The commission agrees with the commenter and revised the citation as suggested.
In sec.122.511(c)(1), EPA indicated that the exemption citation for military
gas turbines was not provided for under the "Type of Service" column for
gas turbines with the following unit attributes: 10 MMBtu/hr < Heat Input
< 100 MMBtu/hr and Date > 10/03/82. 

The commission agrees with the commenter that the exemption for military
gas turbines was not provided; this is because the facilities that are eligible
to apply for these General Operating Permits typically do not have military
gas turbines. If they did, the gas turbine would have to be covered by another
type of operating permit. 

In sec.122.511(c)(1), EPA indicated that the exemption citation for military
gas turbines was not provided for under the "Type of Service" column for
gas turbines with the following unit attributes: 100 MMBtu/hr < Heat Input
and Base Load < 30 megawatts (MW) and 10/03/77 < Date < 1/27/82.
See the preceding response to the EPA comment dealing with military gas
turbines. 

In sec.122.511(c)(1), EPA indicated that the exemption citation for military
gas turbines was not provided for under the "Regulatory Requirements 
[Exemptions]"
column for gas turbines with the following unit attributes: 100 MMBtu/hr
< Heat Input and Base Load < 30 MW and 10/03/77 < Date < 1/27/82.
See the preceding response to the EPA comment dealing with military gas
turbines. 

In sec.122.511(c)(1), EPA indicated that for stationary gas turbines
with the following unit attributes: 100 MMBtu/hr < Heat Input and Base
Load < 30 MW and 10/03/77 < Date < 1/27/82, the nitrogen oxides
emission standards do not represent the difference between "electric utility"
stationary gas turbines and "industrial and pipeline" stationary gas turbines.
EPA suggested dividing the table into two rows to implement the sec.60.332(a)
standards for both "electric utility" and "industrial and pipeline" stationary
gas turbines.  

The commission agrees with the commenter that the standard for "electric
utility" stationary gas turbines was not provided; this is because the 
facilities
that are eligible to apply for these General Operating Permits typically
do not have "electric utility" stationary gas turbines. If they did, the
gas turbine probably would not be eligible for a General Operating Permit
and would have to be covered by another type of operating permit, especially
if the turbine were an acid rain affected source. This fact is because acid
rain affected sources are not eligible for a General Operating Permit per
sec.70.6(d)(1).  

In sec.122.511(c)(5), EPA stated that the "Actual Sulfur Feed Rate (in
LTPD)" is not an applicability determination factor and should be removed
from the permit table. 

The commission disagrees with the commenter that "Actual Sulfur Feed Rate"
is not an applicability determination factor. This value is used to determine
the appropriate applicable reduction efficiency from the tables in sec.60.642(a)
and (b). The commission does recognize that
the rule is inadequate to handle the scenario where the design capacity is ≥
2.0 LTPD but with a current actual capacity of <2.0 LTPD. 

In sec.122.511(c)(5), EPA indicated that for Unit Location of "Other"
and these unit attributes, 1/20/84 < Date, design capacity > 2.0 LTPD,
and an actual acid gas stream feed rate < 2.0 LTPD, there is no exemption
from any or all of the 40 CFR 60, Subpart LLL requirements. 

The commission agrees with the commenter that the unit attributes stated
in the body of the comment would not lead to an exemption from 40 CFR 60,
Subpart LLL; however, the commission recognizes that the rule is inadequate
to handle the scenario where the design capacity is ≥ 2.0 LTPD but with
a current actual capacity of <2.0 LTPD. See the previous comments by EPA
and TMOGA concerning Subpart LLL. 

TMOGA requested a revision to sec.122.511(c)(1), in accordance with its
previous comment number 9. In addition, an exemption citation is needed for
emergencies and firefighting as noted on TMOGA's attachment. 

The commission agrees with the commenter that an exemption citation is
needed for emergencies and firefighting. The commission has incorporated
the comment as requested. The commission is uncertain as to the applicability
of comment number 9 (dealing with the issue number 26 of whether a glycol
dehydrator firebox that burns reboiler exhaust can be considered both a process
heater and a control device) to this comment. 

TMOGA requested a revision to sec.122.511(c)(2). The exemption citations
on the table referring to 40 CFR sec.60.113(d)(1) and (d)(2) and 40 CFR
sec.60.115a(d)(1) are exemptions from monitoring, not exemptions from controls.
TMOGA believes the regulated community is more interested in seeing the 
exemptions
from controls. The proper citation for the exemption from controls is 40
CFR sec.60.112(a)(1) and 40 CFR sec.60.112a(a), respectively. 

The commission agrees with the commenter that the exemptions used in the
permit table were exemptions from monitoring. However, since no 
explicit exemption is given in the rule and the citation for standards
would be sec.60.112(a)(1) and sec.60.112a(a)(1) or (2), the commission
agreed that the section level preceding those citation standards (i.e., 
sec.60.112(a)
and sec.60.112a(a)) would be an appropriate representation for the stated
set of tank attributes. 

TMOGA requested a second revision to sec.122.511(c)(2). Several tanks
are listed as having a regulatory requirement specified at 40 CFR 
sec.60.110(c)(2)
or 40 CFR sec.60.110a(a), but these tanks are exempt from controls as justified
by 40 CFR sec.60.112(a)(1) and 40 CFR sec.60.112a(a), respectively, which
should be inserted as an exemption citation. 

See the response to the preceding TMOGA comment pertaining to the proper
citation for exempting conditions for tanks. 

TMOGA requested a third revision to sec.122.511(c)(2), because 40 CFR
sec.60.113(a)-(c) and 40 CFR sec.60.115a(a)-(c) are incorrectly codified
on this table. 

The commission agrees with the commenter that the listed citations were
codified incorrectly. The commission has incorporated the change as requested.
TMOGA requested a revision to sec.122.511(c)(3). References to 40 CFR
sec.60.116b(f) should be deleted from the table. This regulation only applies
if a waste mixture is stored that is of indeterminate or variable composition.
Storage of these materials is prohibited by proposed sec.122.511(a)(9)(G).
The commission agrees with the commenter that references to sec.60.116b(f)
should be deleted from the permit table codified in sec.122.511(c)(3).
The commission has incorporated the change as requested. 

TMOGA requested a second revision to sec.122.511(c)(3). During workgroup
sessions, industry proposed to the commission that these tables be codified
based on the preamble to 40 CFR 60, Subpart Kb, which apparently intended
for the regulations to cover storage tanks with the same capacity ranges
as NSPS K and Ka (e.g., 10,000 to 20,000 gallons, 20,000 to 40,000 gallons,
etc.). As finally promulgated, the regulations were written in metric units
that do not convert exactly to the same English unit ranges as laid out in
NSPS K and Ka. Upon reconsidering the preamble and the precedents set by
other state regulatory agencies that have adopted these regulations and have
added an exact English unit to metric unit conversion, TMOGA recommended
that this table be revised as shown on its attached marked-up table. The
basis used for the conversion was the fact that the exemption for crude and
condensate tanks is 1589.874 cubic meters. In NSPS K and Ka, the exemption
size is 420,000 gallons. Therefore, the conversion factor TMOGA used was
264.172 gallons per cubic meter. In addition, the qualification criteria,
sec.sec.122.511(a)(9)(E), 122.512(a)(9)(E), 122.513(a)(9)(E), and 
122.514(a)(9)(D)
should be revised from 19,800 gallons to 19,813 gallons. 

The commission agrees with the commenter that there is an inconsistency
in the units on storage capacity between NSPS K, Ka, and Kb; however, the
commission maintains that the intent of the regulations was to maintain the
same delineation in tank size ranges (i.e., 10,000 gallons, 20,000 gallons,
and 40,000 gallons). 

TMOGA requested a revision to sec.122.511(c)(4). References on lines
9 and 22 to sec.115.112(a)(1) as being regulatory requirements should be
noted as exemptions because storage vessels with these unit attributes are
exempt from control requirements. 

The commission agrees that a storage tank with the stated attributes would
be exempt from control requirements; however, the tank still has testing
and recordkeeping requirements found in sec.115.115(a)(1)-(7) and 
sec.115.116(a)(4)
and (5). 

TMOGA requested a revision to sec.122.511(c)(8). As noted in its previous
comment number 14, industry proposed to delete this table and mark it as
"reserved."  

The commission agrees with the commenter that the permit table in 
sec.122.511(c)(8)
should be deleted. The commission has incorporated the change as requested.
It must be noted that the commission is uncertain as to the applicability
of TMOGA's comment number 14 (pertaining to custom fuel monitoring for gas
turbines) to this comment. 

TMOGA requested a revision to sec.122.511(c)(14). The heading of column
4 should be revised to indicate that the VOCs of concern are only those 
specified
in sec.115.121(a)(1). 

The commission is uncertain as to the intention of the comment. The commission's
position is that sec.115.121(a)(1) does not delineate specific VOCs, but
states that any VOCs should be controlled properly. 

TMOGA requested a revision to sec.122.511(c)(16). TMOGA proposed to 
substantially
reduce this table in conjunction with its earlier comment number 15. 

The commission agrees with the commenter that the permit table in 
sec.122.511(c)(16)
should be modified in conjunction with previous comment concerning liquid
fuel firing affecting table sec.122.511(c)(8). The commission has incorporated
the change as requested. It must be noted that the commission is uncertain
as to the applicability of TMOGA's comment number 15 (pertaining to the 
compliance
with the sulfur dioxide standard in 40 CFR 60, Subpart GG) to this comment.
TMOGA requested a revision to sec.122.511(c)(19). References to 
sec.115.412(a)(1)(E)
should be deleted, as this does not pertain to a remote reservoir. 

The commission agrees with the commenter that sec.115.412(a)(1)(E) should
be deleted for remote reservoir cleaning machines. The commission has 
incorporated
the change as requested. 

Specific sec.122.515(c) Comments. In sec.122.515(c)(7),
EPA stated that for non-assisted or steam-assisted flares, where the exit
velocity range is 60 feet per second (ft/sec) < V < 400 ft/sec, and
the heating value > 1,000 British thermal units per standard cubic feet 
(Btu/scf),
Vtype-name="sub">max does not have to be determined, and, therefore,
Vtype-name="sub">max is not a factor in determining compliance
of the flare with the requirements in 40 CFR 60, Subpart A. EPA requested
that the appropriate permit tables be revised accordingly. 

[sub]max 
should be incorporated as requested; however, the commission maintains
that the permit tables accurately reflect this position. This position is
evident by virtue of the fact that for the stated set of attributes, in the
column entitled "V < Vtype-name="sub">max," the entry is
"N/A." The "N/A" entry means that Vtype-name="sub">max is not
required to be calculated in this instance. 

In sec.122.515(c)(7), EPA stated that for non-assisted or steam-assisted
flares, where the exit velocity range is 60 ft/sec < V < 400 ft/sec,
and 200 or 300 Btu/scf < heating value < 1,000 Btu/scf, Vtype-name="sub">
max[sub]
max is a factor in determining compliance of the flare with the requirements
in 40 CFR 60, Subpart A. EPA requested that the appropriate permit tables
be revised accordingly. 

See the response to the previous EPA comment pertaining to non-assisted
or steam-assisted flares concerning Vtype-name="sub">max.

In sec.122.515(c)(7), EPA stated that for air-assisted flares, where
the 300 Btu/scf < heating value, Vtype-name="sub">max does
have to be determined, and, therefore, Vtype-name="sub">max
is a factor in determining compliance of the flare with the requirements
in 40 CFR 60, Subpart A. EPA requested that the appropriate permit tables
be revised accordingly. 

See the response to the previous EPA comment pertaining to non-assisted
or steam-assisted flares concerning Vtype-name="sub">max.

The new sections are adopted under the Texas Health and Safety
Code, the Texas Clean Air Act (TCAA), sec.382.017, which provides the
commission with the authority to adopt rules consistent with the policy and
purposes of the TCAA.

sec.122.511.Oil and Gas General Operating Permit-Brazoria,
Chambers, Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Hardin,
Harris, Jefferson, Liberty, Montgomery, Orange, Tarrant, and Waller Counties.
(a) Qualification criteria. Emission units authorized to operate
under this General Operating Permit shall meet each of the following criteria.
(1) Emission units which are authorized to operate under this
General Operating Permit shall not have a federal prevention of significant
deterioration permit or a federal nonattainment permit. 

(2) Emission units which are authorized to operate under
this General Operating Permit shall not use an alternative means of compliance
which must be approved by the executive director of the commission or the
Administrator of the United States Environmental Protection Agency (EPA).
(3) At the time of application submittal, emission units
which are authorized to operate under this General Operating Permit shall
be in compliance with all requirements as stated in subsections (b) and (c)
of this section. 

(4) Degassing and cleaning of volatile organic chemical
transport vessels with a capacity greater than 8,000 gallons at sites located
in counties subject to the regulatory requirements of Chapter 115 of this
title (relating to Control of Air Pollution From Volatile Organic Compounds)
is not authorized to operate under this General Operating Permit. 

(5) Equipment in benzene service is not authorized to
operate under this General Operating Permit unless the plant site is designed
to produce or use less than 1,000 megagrams (1,100 tons) of benzene per year
as determined according to the provisions of Title 40, Code of Federal 
Regulations,
Part 61 (40 CFR 61) in 40 CFR, sec.61.245(d). 

(6) Cooling towers which are authorized to operate under
this General Operating Permit shall not have operated with chromium-based
water treatment chemicals on or after September 8, 1994, in accordance with
Title 40, Code of Federal Regulations, Part 63 (40 CFR 63), Subpart Q. 
(7) Loading and unloading operations authorized to operate
under this General Operating Permit shall not include the loading of volatile
organic compounds (VOC) with a true vapor pressure greater than 11.0 pounds
per square inch absolute (psia) into transport vessels unless the VOC is
exempt from all of the control requirements of Chapter 115 of this title.
(8) Emission units in marine terminal loading and unloading
operations are not authorized to operate under this General Operating Permit.
(9) For storage vessels, tanks, or containers which are
authorized to operate under this General Operating Permit, the following
subparagraphs shall apply. 

(A) The storage vessels shall not store benzene having a specific
gravity within the range of specific gravities specified in American Society
for Testing and Materials (ASTM) D836-84 for Industrial Grade Benzene, ASTM
D835-85 for Refined Benzene-485, ASTM D2359-85a for Refined Benzene-535,
and ASTM D4734-87 for Refined Benzene-545. 

(B) Internal or external floating roof vessels must be exempt
from all regulatory requirements of Title 40, Code of Federal Regulations,
Part 60 (40 CFR 60), Subparts K, Ka, and Kb. 

(C) Internal or external floating roof tanks must be exempt
from all of the regulatory requirements of Chapter 115 of this title. 

(D) Degassing or cleaning of storage tanks greater than one
million gallons of storage capacity is not authorized to operate under this
General Operating Permit. 

(E) Storage vessels shall not store waste mixtures of indeterminate
or variable composition which are subject to the regulatory requirements
of 40 CFR 60, Subpart Kb. 

(F) Stored materials shall have a maximum true vapor pressure:
(i) less than or equal to 11.1 psia, at storage conditions,
if stored in vessels or tanks subject to the regulatory requirements of 40
CFR 60, Subparts K and Ka; 

(ii) less than 11.1 psia, at storage conditions, if stored
in vessels or tanks subject to the regulatory requirements of 40 CFR 60,
Subparts Kb; and 

(iii) less than 11.0 psia, at storage conditions, if stored
in vessels or tanks after custody transfer and subject to the regulatory
requirements of Chapter 115 of this title. 

(10) Boilers and steam generators which are
authorized to operate under this General Operating Permit shall only be fired
with natural gas, and: 

(A) not have a rated capacity greater than 2,500 million British
thermal units per hour (MMBtu/hr) and constructed, reconstructed, or modified
on or before June 19, 1984; 

(B) not exceed 100 MMBtu/hr rated capacity if constructed,
reconstructed, or modified after June 19, 1984; or 

(C) not have a rated capacity for "opposed-fired," "front-fired,"
or "tangential-fired" steam generating unit of more than 600,000 pounds per
hour maximum continuous steam capacity in Brazoria, Chambers, Collin, Dallas,
Denton, Fort Bend, Galveston, Harris, Liberty, Montgomery, Tarrant, or Waller
Counties. (An "opposed-fired" steam generating unit is defined as a unit
having burners installed on two opposite vertical firebox surfaces. A "front-
fired"
steam generating unit is defined as a unit having all burners installed in
a geometric array on one vertical firebox surface. A "tangential-fired" steam
generating unit is defined as a unit having burners installed on all corners
of the unit at various elevations.) 

(11) Stationary gas turbines which are authorized
to operate under this General Operating Permit shall: 

(A) only be fired with pipeline quality natural gas; 

(B) not be fired with an emergency fuel; 

(C) not be supplied its fuel from an intermediate bulk storage
tank; 

(D) not use 40 CFR, sec.60.333(a) as a means to comply with
the requirements of 40 CFR 60, Subpart GG; 

(E) not exceed the manufacturer's rated base load at International
Standards Organization conditions of 30 megawatts if constructed, reconstructed,
or modified on or after October 3, 1977; and 

(F) not claim the exemption in 40 CFR, sec.60.332(i). 

(12) Emission units subject to the regulatory requirements
of 40 CFR 60, Subpart XX are not authorized to operate under this General
Operating Permit. 

(13) Degreasing operations which are authorized to operate
under this General Operating Permit shall not utilize the following: 

(A) a VOC for open-top vapor or conveyorized degreasing; or
(B) individual batch vapor, in-line vapor, in-line cold, or
batch cold solvent cleaning machines subject to the regulatory requirements
of 40 CFR 63, Subpart T. 

(14) Emission units which are authorized to operate
under this General Operating Permit and are subject to Chapter 111 of this
title (relating to Control of Air Pollution From Visible Emissions and 
Particulate
Matter) may not claim an exemption from the continuous emission monitoring
requirements of sec.111.111(a)(3) of this title (relating to Requirements
for Specified Sources). 

(15) VOC water separators which are authorized to operate
under this General Operating Permit shall not have been subject to the control
requirements of sec.115.132(a)(1)-(3) of this title (relating to Control
Requirements) at any time since July 17, 1991, which later were exempted
from control requirements by satisfying the conditions of sec.115.132(a)(4)(A)
and (B) of this title. 

(16) Process vents which are authorized to operate under
this General Operating Permit: 

(A) shall not be subject to the emission specifications of
sec.115.121(a)(2) and (3) of this title (relating to Emission Specifications)
and the control requirements of sec.115.122(a)(2) of this title (relating
to Control Requirements); or 

(B) shall not have been subject to the emission specifications
of sec.115.121(a)(1) of this title and the control requirements of 
sec.115.122(a)(1)
of this title at any time since July 17, 1991, which later were exempted
from control requirements by satisfying the conditions of sec.115.122(a)(4)(A)
and (B) of this title. 

(17) VOC loading/unloading which is authorized to
operate under this General Operating Permit shall not have been subject to
the control requirements of sec.115.212(a)(2) and 

(4)-(6) of this title (relating to Control Requirements)
at any time since November 15, 1996, which later were exempted from these
control requirements by satisfying the conditions of sec.115.212(a)(12)
of this title. 

(18) Loading racks at a benzene production facility shall
not be authorized to operate under this General Operating Permit unless these
loading racks load only the following: gasoline, crude oil, natural gas liquids,
or petroleum distillates. 

(19) Surface coating operations, other than those performed
on equipment that is located on-site and in-place, which are authorized to
operate under this General Operating Permit shall not emit, when uncontrolled,
a combined weight of VOC greater than or equal to three pounds per hour and
15 pounds in any consecutive 24-hour period. 

(20) Process heaters and furnaces which are authorized
to operate under this General Operating Permit shall only be fired with natural
gas. 

(b) General provisions. 

(1) The owner or operator shall comply with the requirements
relating to General Operating Permits which are contained in this chapter.
(2) The owner or operator shall comply with the conditions
listed in sec.122.143 of this title (relating to Permit Conditions). 
(3) Except for 40 CFR 63, emission units authorized to
operate under this General Operating Permit shall have all applicable 
requirements
codified in this subsection or subsection (c) of this section. 

(4) The following requirements concerning preconstruction
authorizations shall apply. 

(A) The requirements of preconstruction authorizations (new
source review permits) implemented through Chapter 116 of this title (relating
to Control of Air Pollution By Permits for New Construction or Modification)
are not incorporated in this General Operating Permit and will only be enforced
through Chapter 116 of this title. For purposes of this subchapter, 
preconstruction
authorizations include new source review permits, standard exemptions, standard
permits, flexible permits, special permits, and special exemptions. These
preconstruction authorizations shall be referenced in the General Operating
Permit application. Copies of preconstruction authorizations referenced in
the General Operating Permit application may be obtained from the appropriate
Texas Natural Resource Conservation Commission (TNRCC) regional office or
TNRCC central office in Austin. 

(B) The requirements of preconstruction authorizations referenced
in the General Operating Permit application are not eligible for the Permit
Shield provisions in sec.122.145 of this title (relating to Permit Content).
(5) For any unit subject to any subpart in 40 CFR
60, the owner or operator shall comply with the following unless otherwise
stated in the applicable subpart: 

(A) Section 60.1-Applicability; 

(B) Section 60.7-Notification and Recordkeeping; 

(C) Section 60.8-Performance Tests; 

(D) Section 60.9-Availability of Information; 

(E) Section 60.11-Compliance with Standards and Maintenance
Requirements; 

(F) Section 60.12-Circumvention; 

(G) Section 60.13-Monitoring Requirements; 

(H) Section 60.14-Modification; 

(I) Section 60.15-Reconstruction; and 

(J) Section 60.19-General Notification and Reporting Requirements.
(6) The owner or operator shall submit compliance
certifications to the commission at least every 12 months and, upon request,
to the EPA. 

(7) The owner or operator of sites subject to the provisions
of this chapter that are affected by the requirements of Chapter 115, Subchapter
C of this title (relating to Volatile Organic Compound Transfer Operations)
shall comply with the following. 

(A) The requirements in the undesignated head Loading and Unloading
of Volatile Organic Compounds in Chapter 115, Subchapter C of this title,
are as follows: 

(i) Section 115.212(a)(4), (5)(D), and (12) of this title;
(ii) Section 115.214(a)(3) of this title (relating to Inspection
Requirements); 

(iii) Section 115.215(a) of this title (relating to Approved
Test Methods); and 

(iv) Section 115.216(a)(4) and (5) of this title (relating
to Monitoring and Recordkeeping Requirements). 

(B) The requirements in the undesignated head Filling of Gasoline
Storage Vessels (Stage I) for Motor Vehicle Fuel Dispensing Facilities in
Chapter 115, Subchapter C of this title, are as follows: 

(i) Section 115.221 of this title (relating to Emission Specifications);
(ii) Section 115.222 of this title (relating to Control Requirements);
(iii) Section 115.224 of this title (relating to Inspection
Requirements); 

(iv) Section 115.225(1)-(5) of this title (relating to Testing
Requirements); 

(v) Section 115.226 of this title (relating to Recordkeeping
Requirements); and 

(vi) Section 115.227 of this title (relating to Exemptions).
(C) The requirements in the undesignated head Control of Volatile
Organic Compound Leaks From Transport Vessels in Chapter 115, Subchapter
C of this title, are as follows: 

(i) Section 115.234 of this title (relating to Inspection Requirements);
(ii) Section 115.235(1), (2), (3)(A), and (4) of this title
(relating to Approved Test Methods); 

(iii) Section 115.236 of this title (relating to Recordkeeping
Requirements); and 

(iv) Section 115.237 of this title (relating to Exemptions).
(D) The requirements in the undesignated head Control of Vehicle
Refueling Emissions (Stage II) at Motor Vehicle Fuel Dispensing Facilities
in Chapter 115, Subchapter C of this title, are as follows: 

(i) Section 115.241 of this title (relating to Emission Specifications);
(ii) Section 115.242 of this title (relating to Control Requirements);
(iii) Section 115.244 of this title (relating to Inspection
Requirements); 

(iv) Section 115.245(1), (2), (3), (5), and (6) of this title
(relating to Testing Requirements); 

(v) Section 115.246 of this title (relating to Recordkeeping
Requirements); and 

(vi) Section 115.247 of this title (relating to Exemptions).
(E) The requirements in the undesignated head Control of Reid
Vapor Pressure of Gasoline in Chapter 115, Subchapter C of this title for
the El Paso ozone nonattainment area are as follows: 

(i) Section 115.252 of this title (relating to Control Requirements);
(ii) Section 115.255 of this title (relating to Approved Test
Methods); 

(iii) Section 115.256 of this title (relating to Recordkeeping
Requirements); and 

(iv) Section 115.257 of this title (relating to Exemptions).
(8) Owners or operators shall comply with the
following requirements of Chapter 111 of this title. 

(A) Visible emissions from stationary vents constructed on
or before January 31, 1972, shall not exceed 30% opacity averaged over a
six-minute period as required in sec.111.111(a)(1)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(1)(A) of this title
shall be determined as required in sec.111.111(a)(1)(F)(ii) of this title
by Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(B) Visible emissions from stationary vents constructed after
January 31, 1972, shall not exceed 20% opacity averaged over a six-minute
period as required in sec.111.111(a)(1)(B) of this title. Compliance with
the visible emission standard of sec.111.111(a)(1)(B) of this title shall
be determined as required in sec.111.111(a)(1)(F)(ii) of this title by
Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(C) Visible emissions from structures shall not exceed 30%
opacity for any six-minute period from any building, enclosed facility, or
other structure as required in sec.111.111(a)(7)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(7)(A) of this title
shall be determined as required in sec.111.111(a)(7)(B)(i) of this title
by Test Method 9 (40 CFR 60, Appendix A). 

(D) Visible emissions during the cleaning of a firebox or the
building of a new fire, soot blowing, equipment changes, ash removal, and
rapping of precipitators may exceed the limits set forth in sec.111.111
of this title for a period aggregating not more than six minutes in any 60
consecutive minutes, nor more than six hours in any ten-day period as required
in sec.111.111(a)(1)(E) of this title. This exemption shall not apply to
the emissions mass rate standard, as outlined in sec.111.151(a) of this
title (relating to Allowable Emissions Limits). 

(E) Visible emissions from all other sources not specified
in sec.111.111(a)(1), (4), or (7) of this title shall not exceed 30% opacity
for any six-minute period from any building, enclosed facility, or other
structure as required in sec.111.111(a)(8)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(8)(A) of this title
shall be determined by applying Test Method 9 (40 CFR 60, Appendix A) as
required in sec.111.111(a)(8)(B)(i) of this title. 

(F) Certification of opacity readers determining opacities
under Method 9 (as outlined in 40 CFR 60, Appendix A) to comply with 
sec.111.111(a)(1)(G)
of this title shall be accomplished by completing the TNRCC Visible Emissions
Evaluators Course, or approved agency equivalent, no more than 180 days before
the opacity reading. 

(G) Emission limits on nonagricultural processes are as follows.
(i) Emissions of particulate matter from any source may not
exceed the allowable rates specified in Table 1 as required in sec.111.151(a)
of this title. 

Figure 1: 30 TAC sec.122.511(b)(8)(G)(i)

[sub]
e), as determined from Table 2, must reduce the allowable emission
level by multiplying it by [htype-name="sub">e[sub]
e[sup]2 as required in sec.111.151(b) of
this title.

Figure 2: 30 TAC sec.122.511(b)(8)(G)(ii) 

(iii) Effective stack height shall be calculated by the following
equation as required in sec.111.151(c) of this title. 

Figure 3: 30 TAC sec.122.511(b)(8)(G)(iii) 

(H) Open burning, as stated in sec.111.201 of this title
(relating to General Prohibition), shall not be authorized unless the following
requirements are satisfied: 

(i) Section 111.205 of this title (relating to Exception for
Fire Training); 

(ii) Section 111.209(3) of this title (relating to Exception
for Disposal Fires); 

(iii) Section 111.213 of this title (relating to Exception
for Hydrocarbon Burning); 

(iv) Section 111.219 of this title (relating to General Requirements
for Allowable Outdoor Burning); and 

(v) Section 111.221 of this title (relating to Responsibility
for Consequences of Outdoor Burning). 

(I) Owners or operators of sites subject to the provisions
of this chapter in which the sites have Materials Handling, Construction,
Roads, Streets, Alleys, and Parking Lots shall comply with the requirements
of sec.sec.111.143, 111.145, 111.147, and 111.149 of this title (relating
to Materials Handling; Construction and Demolition; Roads, Streets, and Alleys;
and Parking Lots) if they are located in the following areas: 

(i) the City of El Paso, including the Fort Bliss Military
Reservation, except for training areas as referenced in sec.111.141 of
this title (relating to Geographic Areas of Application and Date of Compliance);
or 

(ii) the area of Harris County located inside Beltway 8 (Sam
Houston Tollway). 

(J) Abrasive blasting of water storage tanks performed by portable
operations shall not be authorized unless the following requirements are
satisfied:  

(i) Section 111.133(a)(1) and (2), (b), and (c) of this title
(relating to Testing Requirements); 

(ii) Section 111.135(a), (b), and (c)(1)-(4) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Lead);
(iii) Section 111.137(a), (b)(1)-(4), and (c) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Less
than 1.0% Lead); and 

(iv) Section 111.139(a) and (b) of this title (relating to
Exemptions). 

(9) For covered processes subject to Title 40,
Code of Federal Regulations, Part 68 (40 CFR 68) and specified in 40 CFR,
sec.68.10, the owner or operator shall comply with the requirements of
the Accidental Release Prevention Provisions in 40 CFR 68. The owner or operator
shall submit to the appropriate agency, either a compliance schedule for
meeting the requirements of 40 CFR 68 by the date provided in 40 CFR, 
sec.68.10(a),
or as part of the compliance certification submitted under sec.122.143(4)
of this title, a certification statement that the source is in compliance
with all requirements of 40 CFR 68, including the registration and submission
of a risk management plan. This general provision is enforceable only by
the Administrator of the EPA. 

(10) Owners and operators of a site subject to Title VI
of the FCAA shall meet the following requirements for protection of 
stratospheric
ozone which are enforceable only by the Administrator of the EPA. 

(A) Operation, servicing, maintenance, and repair on refrigeration
and non-motor vehicle air conditioning appliances using ozone-depleting 
refrigerants
on-site shall be conducted in accordance with Title 40, Code of Federal 
Regulations,
Part 82 (40 CFR 82), Subpart F. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
F. 

(B) Servicing, maintenance, and repair of fleet vehicle air
conditioning using ozone-depleting refrigerants shall be conducted in accordance
with 40 CFR 82, Subpart B. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
B.  

(11) For emission units located in the Houston/Galveston
or Beaumont/Port Arthur ozone nonattainment areas and subject to the provisions
of the undesignated head Commercial, Institutional, and Industrial Sources
in Chapter 117, Subchapter B of this title (relating to Combustion at Existing
Major Sources), the owner or operator shall have submitted a complete initial
control plan as required by sec.117.209 of this title (relating to Initial
Control Plan Procedures). 

(12) For emission units located in the Houston/Galveston
or Beaumont/Port Arthur ozone nonattainment areas and subject to the 
requirements
of the undesignated head Commercial, Institutional, and Industrial Sources
in Chapter 117, Subchapter B of this title, the owner or operator shall comply
with the requirements of the undesignated head Commercial, Institutional,
and Industrial Sources by the compliance date specified in sec.117.520
of this title (relating to Compliance Schedule for Commercial, Institutional,
and Industrial Combustion Sources). 

(13) Stationary gas turbines subject to 40 CFR 60, Subpart
GG shall only comply with the requirements of 40 CFR, sec.60.333(b) for
fuel sulfur content. 

(14) Stationary gas turbines subject to 40 CFR 60, Subpart
GG shall only fire natural gas and may be allowed to utilize a custom fuel
monitoring schedule, as an alternative provided for under 40 CFR, 
sec.60.334(b)(2),
as long as the provisions are at least as stringent as the following. 

(A) Monitoring of fuel nitrogen is not required while pipeline
quality natural gas is the only fuel fired in the gas turbine. 

(B) The fuel supplier or suppliers shall be identified for
the record during turbine startup, and at any time that the fuel supplier
or suppliers change. 

(C) Analysis for fuel sulfur content of the natural gas shall
be conducted using one of the approved ASTM Test Methods for the measurement
of sulfur in gaseous fuels, as referenced in 40 CFR, sec.60.335(d), or
the Gas Processors Association (GPA) test method entitled "Test for Hydrogen
Sulfide and Carbon Dioxide in Natural Gas Using Length of Stain Tubes." The
test methods are listed as follows: 

(i) ASTM D1072-80; 

(ii) ASTM D3031-81; 

(iii) ASTM D3246-81; 

(iv) ASTM D4084-82; or 

(v) GPA Standard 2377-86. 

(D) The owner or operator of a gas turbine who is not currently
utilizing an approved custom fuel monitoring schedule shall be required to
initially sample the fuel supply daily for a period of two weeks to establish,
after turbine startup, that the pipeline quality natural gas fuel supply
is low in sulfur content. 

(E) After the monitoring required in subparagraph (D) of this
paragraph, sulfur monitoring shall be conducted twice monthly for six months.
If this monitoring shows little variability in the fuel sulfur content, and
indicates consistent compliance with 40 CFR, sec.60.333(b), then sulfur
monitoring shall be conducted once per quarter for six quarters. 

(F) If after the monitoring required in subparagraph (E) of
this paragraph, or herein, the sulfur content of the fuel shows little 
variability
and, calculated as sulfur dioxide, represents consistent compliance with
the sulfur dioxide emission limits specified under 40 CFR, sec.60.333,
sample analysis shall be conducted twice per annum. This monitoring shall
be conducted during the first and third quarters of each calendar year. 
(G) Should any sulfur analysis as required in subparagraphs
(E) or (F) of this paragraph indicate noncompliance with 40 CFR, sec.60.333,
the owner or operator shall notify the commission within two weeks of such
excess emissions. The commission will then reexamine the custom schedule.
Sulfur monitoring shall be conducted weekly during the interim period when
this custom schedule is being reexamined. 

(H) If there is a change in fuel supply (supplier), the owner
or operator shall be required to sample the fuel daily for a period of two
weeks to re-establish for the record that the fuel supply is low in sulfur
content. If the fuel supply's low sulfur content is re-established, then
the custom fuel monitoring schedule can be resumed. 

(I) Stationary gas turbines that use the same supply of pipeline
quality natural gas to fuel multiple gas turbines may monitor the fuel sulfur
content at a single common location. 

(J) Applicants shall attach the custom fuel monitoring schedule
to their General Operating Permit application. 

(K) Compliance with the provisions of this paragraph fulfills
the requirement that custom schedules be approved by the Administrator, as
required by 40 CFR, sec.60.334(b)(2), before being used as an alternative
means of compliance. 

(15) Stationary gas turbines using water or steam
injection need not comply with the nitrogen oxide control requirements of
40 CFR, sec.60.332(a) during conditions when ice fog is deemed a traffic
hazard by the owner or operator of the stationary gas turbine. 

(16) Surface coating operations, other than those performed
on equipment that is located on-site and in-place, which are authorized to
operate under this General Operating Permit and are subject to the conditions
for exemptions referenced in sec.115.427(a)(3)(A) of this title (relating
to Exemptions) shall maintain sufficient records to document applicability
as required by sec.115.426(a)(4) of this title (relating to Monitoring
and Recordkeeping Requirements). 

(17) The owner or operator shall keep records as required
in 40 CFR, sec.61.246(i) if claiming the exemption in 40 CFR, sec.61.110(c)(2),
pertaining to National Emission Standard for Equipment Leaks (Fugitive Emission
Sources) of Benzene. 

(18) The owner or operator of a sweetening unit with a
design capacity greater than or equal to 2.0 long tons per day (LTPD) that
operates at less than 2.0 LTPD, may choose to limit the sulfur feed rate,
i.e., the hydrogen sulfide (Htype-name="sub">2S) in the acid
gas (expressed as sulfur) from the sweetening unit to less than 2.0 LTPD.
For those owners or operators who choose to do so, the sulfur feed rate limit
established in this General Operating Permit shall be federally enforceable.
Compliance with this general provision is deemed compliance with 40 CFR 60,
Subpart LLL pursuant to the Permit Shield provisions in sec.122.145 of
this title. If a sweetening unit operates at greater than or equal to 2.0
LTPD, then the owner or operator shall comply with the permit tables. The
owner or operator shall monitor the sulfur feed rate using the following
procedure and record the sulfur feed rate every calender month to demonstrate
compliance with 40 CFR 60, Subpart LLL: 

Figure 4: 30 TAC sec.122.511(b)(18) 

(19) Owners or operators who claim any of the exemptions
stated 40 CFR, sec.60.332(e), (g), (h), (j), or (l) shall maintain records
to prove their exemption status in lieu of performing the monitoring, 
recordkeeping,
reporting, and testing requirements specified in 40 CFR 60, Subpart GG. 
Compliance
with this paragraph is deemed compliance with the nitrogen oxide emission
limit's monitoring, recordkeeping, reporting, and testing requirements of
40 CFR 60, Subpart GG in accordance with the Permit Shield provisions in
sec.122.145 of this title. 

(20) After November 15, 1996, compliance with the undesignated
head Fugitive Emission Control in Petroleum Refining and Petrochemical Processes
in Chapter 115, Subchapter D of this title (relating to Petroleum Refining
and Petrochemical Processes) is deemed compliance with undesignated head
Fugitive Emission Control in Natural Gas/Gasoline Processing Operations in
Chapter 115, Subchapter D of this title in accordance with the Permit Shield
provisions in sec.122.145 of this title. 

(21) Upon the granting of this General Operating Permit,
detailed applicability determinations and the underlying basis for those
determinations in the General Operating Permit application submitted to comply
with the requirements of this chapter shall become conditions under which
the owner or operator shall operate. 

(c) Permit tables. 

(1) The following permit table lists the requirements for Stationary
Gas Turbines affected by 40 CFR 60, Subpart GG. 

Figure 5: 30 TAC sec.122.511(c)(1) 

(2) The following permit table lists the requirements
for Storage Vessels affected by 40 CFR 60, Subparts K and Ka. 

Figure 6: 30 TAC sec.122.511(c)(2) 

(3) The following permit table lists the requirements
for Storage Vessels affected by 40 CFR 60, Subpart Kb. 

Figure 7: 30 TAC sec.122.511(c)(3) 

(4) The following permit table lists the requirements
for Storage Vessels affected by Chapter 115 of this title. 

Figure 8: 30 TAC sec.122.511(c)(4) 

(5) The following permit table lists the requirements
for Gas Sweetening Units Not Utilizing Sulfur Recovery affected by 40 CFR
60, Subpart LLL. 

Figure 9: 30 TAC sec.122.511(c)(5) 

(6) The following permit table lists the requirements
for Natural Gas Processing Plant Fugitive Emissions affected by 40 CFR 60,
Subpart KKK. 

Figure 10: 30 TAC sec.122.511(c)(6) 

(7) The following permit table lists the requirements
for Natural Gas Processing Operations Fugitive Emissions affected by Chapter
115 of this title. 

Figure 11: 30 TAC sec.122.511(c)(7) 

(8) The following permit table lists the requirements
for Flares affected by 40 CFR 60, Subpart A. 

Figure 12: 30 TAC sec.122.511(c)(8) 

(9) The following permit table lists the requirements
for Flares affected by Chapter 111 of this title. 

Figure 13: 30 TAC sec.122.511(c)(9) 

(10) The following permit table lists the requirements
for Gas Sweetening Units Utilizing Sulfur Recovery affected by 40 CFR 60,
Subpart LLL. 

Figure 14: 30 TAC sec.122.511(c)(10) 

(11) The following permit table lists the requirements
for Gas Sweetening Units Utilizing Sulfur Recovery affected by Chapter 112
of this title (relating to Sulfur Compounds). 

Figure 15: 30 TAC sec.122.511(c)(11) 

(12) The following permit table lists the requirements
for Stationary Vents affected by Chapter 111 of this title. 

Figure 16: 30 TAC sec.122.511(c)(12) 

(13) The following permit table lists the requirements
for Stationary Vents affected by Chapter 115 of this title. 

Figure 17: 30 TAC sec.122.511(c)(13) 

(14) The following permit table lists the requirements
for Combustion Units affected by Chapter 117 of this title (relating to Control
of Air Pollution From Nitrogen Compounds). 

Figure 18: 30 TAC sec.122.511(c)(14) 

(15) The following permit table lists the requirements
for Boilers/Steam Generators affected by 40 CFR 60, Subparts Db and Dc. 
Figure 19: 30 TAC sec.122.511(c)(15) 

(16) The following permit table lists the requirements
for Non-Marine VOC Loading/Unloading Operations affected by Chapter 115 of
this title. 

Figure 20: 30 TAC sec.122.511(c)(16) 

(17) The following permit table lists the requirements
for VOC Water Separators affected by Chapter 115 of this title. 

Figure 21: 30 TAC sec.122.511(c)(17) 

(18) The following permit table lists the requirements
for Cold Cleaning Degreasing Operations affected by Chapter 115 of this title.
Figure 22: 30 TAC sec.122.511(c)(18) 

sec.122.512.Oil and Gas General Operating Permit-Gregg,
Nueces, and Victoria Counties. 
(a) Qualification criteria. Emission units authorized to operate
under this General Operating Permit shall meet each of the following criteria.
(1) Emission units which are authorized to operate under this
General Operating Permit shall not have a federal prevention of significant
deterioration permit or a federal nonattainment permit. 

(2) Emission units which are authorized to operate under
this General Operating Permit shall not use an alternative means of compliance
which must be approved by the executive director of the commission or the
Administrator of the United States Environmental Protection Agency (EPA).
(3) At the time of application submittal, emission units
which are authorized to operate under this General Operating Permit shall
be in compliance with all requirements as stated in subsections (b) and (c)
of this section. 

(4) Equipment in benzene service is not authorized to
operate under this General Operating Permit unless the plant site is designed
to produce or use less than 1,000 megagrams (1,100 tons) of benzene per year
as determined according to the provisions of Title 40, Code of Federal 
Regulations,
Part 61 (40 CFR 61) in 40 CFR, sec.61.245(d). 

(5) Cooling towers which are authorized to operate under
this General Operating Permit shall not have operated with chromium-based
water treatment chemicals on or after September 8, 1994, in accordance with
Title 40, Code of Federal Regulations, Part 63 (40 CFR 63), Subpart Q. 
(6) Loading and unloading operations authorized to operate
under this General Operating Permit shall not include the loading of volatile
organic compounds (VOC) with a true vapor pressure greater than 11.0 pounds
per square inch absolute (psia) into transport vessels unless the VOC is
exempt from all of the control requirements of Chapter 115 of this title
(relating to Control of Air Pollution From Volatile Organic Compounds). 
(7) Emission units in marine terminal loading and unloading
operations are not authorized to operate under this General Operating Permit.
(8) For storage vessels, tanks, or containers which are
authorized to operate under this General Operating Permit, the following
subparagraphs shall apply. 

(A) The storage vessels shall not store benzene having a specific
gravity within the range of specific gravities specified in American Society
for Testing and Materials (ASTM) D836-84 for Industrial Grade Benzene, ASTM
D835-85 for Refined Benzene-485, ASTM D2359-85a for Refined Benzene-535,
and ASTM D4734-87 for Refined Benzene-545. 

(B) Internal or external floating roof vessels must be exempt
from all regulatory requirements of Title 40, Code of Federal Regulations,
Part 60 (40 CFR 60), Subparts K, Ka, and Kb. 

(C) Internal or external floating roof tanks must be exempt
from all of the regulatory requirements of Chapter 115 of this title. 

(D) Degassing or cleaning of storage tanks greater than one
million gallons of storage capacity is not authorized to operate under this
general permit. 

(E) Storage vessels shall not store waste mixtures of indeterminate
or variable composition which are subject to the regulatory requirements
of 40 CFR 60, Subpart Kb. 

(F) Stored materials shall have a maximum true vapor pressure:
(i) less than or equal to 11.1 psia, at storage conditions,
if stored in vessels or tanks subject to the regulatory requirements of 40
CFR 60, Subparts K and Ka; 

(ii) less than 11.1 psia, at storage conditions, if stored
in vessels or tanks subject to the regulatory requirements of 40 CFR 60,
Subparts Kb; and 

(iii) less than 11.0 psia, at storage conditions, if stored
in vessels or tanks after custody transfer and subject to the regulatory
requirements of Chapter 115 of this title. 

(9) Boilers and steam generators which are authorized
to operate under this General Operating Permit shall only be fired with natural
gas, and: 

(A) not have a rated capacity greater than 2,500 million British
thermal units per hour (MMBtu/hr) and constructed, reconstructed, or modified
on or before June 19, 1984; or 

(B) not exceed 100 MMBtu/hr rated capacity if constructed,
reconstructed, or modified after June 19, 1984. 

(10) Stationary gas turbines which are authorized
to operate under this General Operating Permit shall: 

(A) only be fired with pipeline quality natural gas; 

(B) not be fired with an emergency fuel; 

(C) not be supplied its fuel from an intermediate bulk storage
tank; 

(D) not use 40 CFR, sec.60.333(a) as a means to comply with
the requirements of 40 CFR 60, Subpart GG; 

(E) not exceed the manufacturer's rated base load at International
Standards Organization conditions of 30 megawatts if constructed, reconstructed,
or modified on or after October 3, 1977; and 

(F) not claim the exemption in 40 CFR, sec.60.332(i). 

(11) Emission units subject to the regulatory requirements
of 40 CFR 60, Subpart XX are not authorized to operate under this General
Operating Permit. 

(12) Degreasing operations subject to this General Operating
Permit and located on any property shall not emit, when uncontrolled, a combined
weight of VOC greater than or equal to 550 pounds in any consecutive 24-hour
period; or, utilize the following: 

(A) a VOC for open-top vapor or conveyorized degreasing; or
(B) individual batch vapor, in-line vapor, in-line cold, or
batch cold solvent cleaning machines subject to the regulatory requirements
of 40 CFR 63, Subpart T. 

(13) Emission units which are authorized to operate
under this General Operating Permit and are subject to Chapter 111 of this
title (relating to Control of Air Pollution From Visible Emissions and 
Particulate
Matter) may not claim an exemption from the continuous emission monitoring
requirements of sec.111.111(a)(3) of this title (relating to Requirements
for Specified Sources). 

(14) Loading racks at a benzene production facility shall
not be authorized to operate under this General Operating Permit unless these
loading racks load only the following: gasoline, crude oil, natural gas liquids,
or petroleum distillates. 

(15) Surface coating operations, other than those performed
on equipment that is located on-site and in-place, which are authorized to
operate under this General Operating Permit shall not emit, when uncontrolled,
a combined weight of VOC greater than or equal to 550 pounds (249.5 kilograms)
in any consecutive 24-hour period. 

(16) Process heaters and furnaces which are authorized
to operate under this General Operating Permit shall only be fired with natural
gas. 

(b) General provisions. 

(1) The owner or operator shall comply with the requirements
relating to General Operating Permits which are contained in this chapter.
(2) The owner or operator shall comply with the conditions
listed in sec.122.143 of this title (relating to Permit Conditions). 
(3) Except for 40 CFR 63, emission units authorized to
operate under this General Operating Permit shall have all applicable 
requirements
codified in this subsection or subsection (c) of this section. 

(4) The following requirements concerning preconstruction
authorizations shall apply. 

(A) The requirements of preconstruction authorizations (new
source review permits) implemented through Chapter 116 of this title (relating
to Control of Air Pollution By Permits for New Construction or Modification)
are not incorporated in this General Operating Permit and will only be enforced
through Chapter 116 of this title. For purposes of this subchapter, 
preconstruction
authorizations include new source review permits, standard exemptions, standard
permits, flexible permits, special permits, and special exemptions. These
preconstruction authorizations shall be referenced in the General Operating
Permit application. Copies of preconstruction authorizations referenced in
the General Operating Permit application may be obtained from the appropriate
Texas Natural Resource Conservation Commission (TNRCC) regional office or
TNRCC central office in Austin. 

(B) The requirements of preconstruction authorizations referenced
in the General Operating Permit application are not eligible for the Permit
Shield provisions in sec.122.145 of this title (relating to Permit Content).
(5) For any unit subject to any subpart in 40 CFR
60, the owner or operator shall comply with the following unless otherwise
stated in the applicable subpart: 

(A) Section 60.1-Applicability; 

(B) Section 60.7-Notification and Recordkeeping; 

(C) Section 60.8-Performance Tests; 

(D) Section 60.9-Availability of Information; 

(E) Section 60.11-Compliance with Standards and Maintenance
Requirements; 

(F) Section 60.12-Circumvention; 

(G) Section 60.13-Monitoring Requirements; 

(H) Section 60.14-Modification; 

(I) Section 60.15-Reconstruction; and 

(J) Section 60.19-General Notification and Reporting Requirements.
(6) The owner or operator shall submit compliance
certifications to the commission at least every 12 months and, upon request,
to the EPA. 

(7) Owners or operators shall comply with the following
requirements of Chapter 111 of this title. 

(A) Visible emissions from stationary vents constructed on
or before January 31, 1972, shall not exceed 30% opacity averaged over a
six-minute period as required in sec.111.111(a)(1)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(1)(A) of this title
shall be determined as required in sec.111.111(a)(1)(F)(ii) of this title
by Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(B) Visible emissions from stationary vents constructed after
January 31, 1972, shall not exceed 20% opacity averaged over a six-minute
period as required in sec.111.111(a)(1)(B) of this title. Compliance with
the visible emission standard of sec.111.111(a)(1)(B) of this title shall
be determined as required in sec.111.111(a)(1)(F)(ii) of this title by
Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(C) Visible emissions from structures shall not exceed 30%
opacity for any six-minute period from any building, enclosed facility, or
other structure as required in sec.111.111(a)(7)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(7)(A) of this title
shall be determined as required in sec.111.111(a)(7)(B)(i) of this title
by Test Method 9 (40 CFR 60, Appendix A). 

(D) Visible emissions during the cleaning of a firebox or the
building of a new fire, soot blowing, equipment changes, ash removal, and
rapping of precipitators may exceed the limits set forth in sec.111.111
of this title for a period aggregating not more than six minutes in any 60
consecutive minutes, nor more than six hours in any ten-day period as required
in sec.111.111(a)(1)(E) of this title. This exemption shall not apply to
the emissions mass rate standard, as outlined in sec.111.151(a) of this
title (relating to Allowable Emissions Limits). 

(E) Visible emissions from all other sources not specified
in sec.111.111(a)(1), (4), or (7) of this title shall not exceed 30% opacity
for any six-minute period from any building, enclosed facility, or other
structure as required in sec.111.111(a)(8)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(8)(A) of this title
shall be determined by applying Test Method 9 (40 CFR 60, Appendix A) as
required in sec.111.111(a)(8)(B)(i) of this title. 

(F) Certification of opacity readers determining opacities
under Method 9 (as outlined in 40 CFR 60, Appendix A) to comply with 
sec.111.111(a)(1)(G)
of this title shall be accomplished by completing the TNRCC Visible Emissions
Evaluators Course, or approved agency equivalent, no more than 180 days before
the opacity reading. 

(G) Emission limits on nonagricultural processes are as follows.
(i) Emissions of particulate matter from any source may not
exceed the allowable rates specified in Table 1 as required in sec.111.151(a)
of this title. 

Figure 1 : 30 TAC sec.122.512(b)(7)(G)(i) 

[sub]
e[sub]
e), as determined from Table 2, must reduce the allowable emission
level by multiplying it by [htype-name="sub">e[sub]
e[sup]2 as required in sec.111.151(b) of
this title.

Figure 2 : 30 TAC sec.122.512(b)(7)(G)(ii) 

(iii) Effective stack height shall be calculated by the following
equation as required in sec.111.151(c) of this title. 

Figure 3 : 30 TAC sec.122.512(b)(7)(G)(iii) 

(H) Open burning, as stated in sec.111.201 of this title
(relating to General Prohibition), shall not be authorized unless the following
requirements are satisfied: 

(i) Section 111.205 of this title (relating to Exception for
Fire Training); 

(ii) Section 111.209(3) of this title (relating to Exception
for Disposal Fires); 

(iii) Section 111.213 of this title (relating to Exception
for Hydrocarbon Burning); 

(iv) Section 111.219 of this title (relating to General Requirements
for Allowable Outdoor Burning); and 

(v) Section 111.221 of this title (relating to Responsibility
for Consequences of Outdoor Burning). 

(I) Owners or operators of sites subject to the provisions
of this chapter in which the sites have Materials Handling, Construction,
Roads, Streets, Alleys, and Parking Lots shall comply with the requirements
of sec.sec.111.143, 111.145, 111.147, and 111.149 of this title (relating
to Materials Handling; Construction and Demolition; Roads, Streets, and Alleys;
and Parking Lots) if they are located in the area of Nueces County outlined
in the Group II State Implementation Plan for Inhalable Particulate Matter.
(J) Abrasive blasting of water storage tanks performed by portable
operations shall not be authorized unless the following requirements are
satisfied:  

(i) Section 111.133(a)(1) and (2), (b), and (c) of this title
(relating to Testing Requirements); 

(ii) Section 111.135(a), (b), and (c)(1)-(4) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Lead);
(iii) Section 111.137(a), (b)(1)-(4), and (c) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Less
than 1.0% Lead); and 

(iv) Section 111.139(a) and (b) of this title (relating to
Exemptions). 

(8) For covered processes subject to Title 40,
Code of Federal Regulations, Part 68 (40 CFR 68) and specified in 40 CFR,
sec.68.10, the owner or operator shall comply with the requirements of
the Accidental Release Prevention Provisions in 40 CFR 68. The owner or operator
shall submit to the appropriate agency, either a compliance schedule for
meeting the requirements of 40 CFR 68 by the date provided in 40 CFR, 
sec.68.10(a),
or as part of the compliance certification submitted under sec.122.143(4)
of this title, a certification statement that the source is in compliance
with all requirements of 40 CFR 68, including the registration and submission
of a risk management plan. This general provision is enforceable only by
the Administrator of the EPA. 

(9) Owners and operators of a site subject to Title VI
of the FCAA shall meet the following requirements for protection of 
stratospheric
ozone which are enforceable only by the Administrator of the EPA. 

(A) Operation, servicing, maintenance, and repair on refrigeration
and non-motor vehicle air conditioning appliances using ozone-depleting 
refrigerants
on-site shall be conducted in accordance with Title 40, Code of Federal 
Regulations,
Part 82 (40 CFR 82), Subpart F. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
F. 

(B) Servicing, maintenance, and repair of fleet vehicle air
conditioning using ozone-depleting refrigerants shall be conducted in accordance
with 40 CFR 82, Subpart B. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
B.  

(10) Stationary gas turbines subject to 40 CFR 60,
Subpart GG shall only comply with the requirements of 40 CFR, sec.60.333(b)
for fuel sulfur content. 

(11) Stationary gas turbines subject to 40 CFR 60, Subpart
GG shall only fire natural gas and may be allowed to utilize a custom fuel
monitoring schedule, as an alternative provided for under 40 CFR, 
sec.60.334(b)(2),
as long as the provisions are at least as stringent as the following. 

(A) Monitoring of fuel nitrogen is not required while pipeline
quality natural gas is the only fuel fired in the gas turbine. 

(B) The fuel supplier or suppliers shall be identified for
the record during turbine startup, and at any time that the fuel supplier
or suppliers change. 

(C) Analysis for fuel sulfur content of the natural gas shall
be conducted using one of the approved ASTM Test Methods for the measurement
of sulfur in gaseous fuels, as referenced in 40 CFR, sec.60.335(d), or
the Gas Processors Association (GPA) test method entitled "Test for Hydrogen
Sulfide and Carbon Dioxide in Natural Gas Using Length of Stain Tubes." The
test methods are listed as follows: 

(i) ASTM D1072-80; 

(ii) ASTM D3031-81; 

(iii) ASTM D3246-81; 

(iv) ASTM D4084-82; or 

(v) GPA Standard 2377-86. 

(D) The owner or operator of a gas turbine who is not currently
utilizing an approved custom fuel monitoring schedule shall be required to
initially sample the fuel supply daily for a period of two weeks to establish,
after turbine startup, that the pipeline quality natural gas fuel supply
is low in sulfur content. 

(E) After the monitoring required in subparagraph (D) of this
paragraph, sulfur monitoring shall be conducted twice monthly for six months.
If this monitoring shows little variability in the fuel sulfur content, and
indicates consistent compliance with 40 CFR, sec.60.333(b), then sulfur
monitoring shall be conducted once per quarter for six quarters. 

(F) If after the monitoring required in subparagraph (E) of
this paragraph, or herein, the sulfur content of the fuel shows little 
variability
and, calculated as sulfur dioxide, represents consistent compliance with
the sulfur dioxide emission limits specified under 40 CFR, sec.60.333,
sample analysis shall be conducted twice per annum. This monitoring shall
be conducted during the first and third quarters of each calendar year. 
(G) Should any sulfur analysis as required in subparagraphs
(E) or (F) of this paragraph indicate noncompliance with 40 CFR, sec.60.333,
the owner or operator shall notify the commission within two weeks of such
excess emissions. The commission will then reexamine the custom schedule.
Sulfur monitoring shall be conducted weekly during the interim period when
this custom schedule is being reexamined. 

(H) If there is a change in fuel supply (supplier), the owner
or operator shall be required to sample the fuel daily for a period of two
weeks to re-establish for the record that the fuel supply is low in sulfur
content. If the fuel supply's low sulfur content is re-established, then
the custom fuel monitoring schedule can be resumed. 

(I) Stationary gas turbines that use the same supply of pipeline
quality natural gas to fuel multiple gas turbines may monitor the fuel sulfur
content at a single common location. 

(J) Applicants shall attach the custom fuel monitoring schedule
to their General Operating Permit application. 

(K) Compliance with the provisions of this paragraph fulfills
the requirement that custom schedules be approved by the Administrator, as
required by 40 CFR, sec.60.334(b)(2), before being used as an alternative
means of compliance. 

(12) Stationary gas turbines using water or steam
injection need not comply with the nitrogen oxide control requirements of
40 CFR, sec.60.332(a) during conditions when ice fog is deemed a traffic
hazard by the owner or operator of the stationary gas turbine. 

(13) The owner or operator of sites subject to the provisions
of this chapter that are affected by the requirements of the undesignated
head Loading and Unloading of Volatile Organic Compounds in Chapter 115,
Subchapter C of this title (relating to Volatile Organic Compound Transfer
Operations), shall comply with the following requirements: 

(A) Section 115.212(b)(2) and (3)(C) of this title (relating
to Control Requirements); 

(B) Section 115.215(b) of this title (relating to Approved
Test Methods); and 

(C) Section 115.216(b)(5) of this title (relating to Monitoring
and Recordkeeping Requirements). 

(14) Surface coating operations, other than those
performed on equipment that is located on-site and in-place, which are 
authorized
to operate under this General Operating Permit and are subject to the conditions
for exemptions referenced in sec.115.427(b)(1) of this title (relating
to Exemptions), shall maintain sufficient records to document applicability
as required by sec.115.426(b)(3) of this title (relating to Monitoring
and Recordkeeping Requirements). 

(15) The owner or operator shall keep records as required
in 40 CFR, sec.61.246(i) if claiming the exemption in 40 CFR, sec.61.110(c)(2),
pertaining to National Emission Standard for Equipment Leaks (Fugitive Emission
Sources) of Benzene. 

(16) The owner or operator of a sweetening unit with a
design capacity greater than or equal to 2.0 long tons per day (LTPD) that
operates at less than 2.0 LTPD, may choose to limit the sulfur feed rate,
i.e., the hydrogen sulfide (Htype-name="sub">2S) in the acid
gas (expressed as sulfur) from the sweetening unit, to less than 2.0 LTPD.
For those owners or operators who choose to do so, the requirements of 
sec.122.511(b)(18)
of this title (relating to Oil and Gas General Operating Permit - Brazoria,
Chambers, Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Hardin,
Harris, Jefferson, Liberty, Montgomery, Orange, Tarrant, and Waller Counties)
shall apply. 

(17) Owners or operators who claim any of the exemptions
stated 40 CFR, sec.60.332(e), (g), (h), (j), or (l) shall maintain records
to prove their exemption status in lieu of performing the monitoring, 
recordkeeping,
reporting, and testing requirements specified in 40 CFR 60, Subpart GG. 
Compliance
with this paragraph is deemed compliance with the nitrogen oxide emission
limit's monitoring, recordkeeping, reporting, and testing requirements of
40 CFR 60, Subpart GG in accordance with the Permit Shield provisions in
sec.122.145 of this title. 

(18) Upon the granting of this General Operating Permit,
detailed applicability determinations and the underlying basis for those
determinations in the General Operating Permit application submitted to comply
with the requirements of this chapter shall become conditions under which
the owner or operator shall operate. 

(c) Permit tables. 

(1) The permit table which lists the requirements for Stationary
Gas Turbines affected by 40 CFR 60, Subpart GG is contained in sec.122.511(c)(1)
of this title. 

(2) The permit table which lists the requirements for
Storage Vessels affected by 40 CFR 60, Subparts K and Ka is contained in
sec.122.511(c)(2) of this title. 

(3) The permit table which lists the requirements for
Storage Vessels affected by 40 CFR 60, Subpart Kb is contained in 
sec.122.511(c)(3)
of this title. 

(4) The following permit table lists the requirements
for Storage Vessels affected by Chapter 115 of this title. 

Figure 4: 30 TAC sec.122.512(c)(4) 

(5) The permit table which lists the requirements for
Gas Sweetening Units Not Utilizing Sulfur Recovery affected by 40 CFR 60,
Subpart LLL is contained in sec.122.511(c)(5) of this title. 

(6) The permit table which lists the requirements for
Natural Gas Processing Plant Fugitive Emissions affected by 40 CFR 60, Subpart
KKK is contained in sec.122.511(c)(6) of this title. 

(7) The permit table which lists the requirements for
Flares affected by 40 CFR 60, Subpart A is contained in sec.122.511(c)(8)
of this title. 

(8) The permit table which lists the requirements for
Flares affected by Chapter 111 of this title is contained in sec.122.511(c)(9)
of this title. 

(9) The permit table which lists the requirements for
Gas Sweetening Units Utilizing Sulfur Recovery affected by 40 CFR 60, Subpart
LLL is contained in sec.122.511(c)(10) of this title. 

(10) The permit table which lists the requirements for
Gas Sweetening Units Utilizing Sulfur Recovery affected by Chapter 112 of
this title (relating to Sulfur Compounds) is contained in sec.122.511(c)(11)
of this title. 

(11) The permit table which lists the requirements for
Stationary Vents affected by Chapter 111 of this title is contained in 
sec.122.511(c)(12)
of this title. 

(12) The following permit table lists the requirements
for Stationary Vents affected by Chapter 115 of this title. 

Figure 5: 30 TAC sec.122.512(c)(12) 

(13) The permit table which lists the requirements for
Boilers/Steam Generators affected by 40 CFR 60, Subparts Db and Dc is contained
in sec.122.511(c)(15) of this title. 

(14) The following permit table lists the requirements
for Non-Marine VOC Loading/Unloading Operations affected by Chapter 115 of
this title. 

Figure 6: 30 TAC sec.122.512(c)(14) 

(15) The following permit table lists the requirements
for VOC Water Separators affected by Chapter 115 of this title. 

Figure 7: 30 TAC sec.122.512(c)(15)  

sec.122.513.Oil and Gas General Operating Permit-Aransas,
Bexar, Calhoun, Matagorda, San Patricio, and Travis Counties.
(a) Qualification criteria. Emission units authorized to operate
under this General Operating Permit shall meet each of the following criteria.
(1) Emission units which are authorized to operate under this
General Operating Permit shall not have a federal prevention of significant
deterioration permit or a federal nonattainment permit. 

(2) Emission units which are authorized to operate under
this General Operating Permit shall not use an alternative means of compliance
which must be approved by the executive director of the commission or the
Administrator of the United States Environmental Protection Agency (EPA).
(3) At the time of application submittal, emission units
which are authorized to operate under this General Operating Permit shall
be in compliance with all requirements as stated in subsections (b) and (c)
of this section. 

(4) Equipment in benzene service is not authorized to
operate under this General Operating Permit unless the plant site is designed
to produce or use less than 1,000 megagrams (1,100 tons) of benzene per year
as determined according to the provisions of Title 40, Code of Federal 
Regulations,
Part 61 (40 CFR 61) in 40 CFR sec.61.245(d). 

(5) Cooling towers which are authorized to operate under
this General Operating Permit shall not have operated with chromium-based
water treatment chemicals on or after September 8, 1994, in accordance with
Title 40, Code of Federal Regulations, Part 63 (40 CFR 63), Subpart Q. 
(6) Loading and unloading operations authorized to operate
under this General Operating Permit shall not include the loading of volatile
organic compounds (VOC) with a true vapor pressure greater than 11.0 pounds
per square inch absolute (psia) into transport vessels unless the VOC is
exempt from all of the control requirements of Chapter 115 of this title.
(7) Emission units in marine terminal loading and unloading
operations are not authorized to operate under this General Operating Permit.
(8) For storage vessels, tanks, or containers which are
authorized to operate under this General Operating Permit, the following
subparagraphs shall apply. 

(A) The storage vessels shall not store benzene having a specific
gravity within the range of specific gravities specified in American Society
for Testing and Materials (ASTM) D836-84 for Industrial Grade Benzene, ASTM
D835-85 for Refined Benzene-485, ASTM D2359-85a for Refined Benzene-535,
and ASTM D4734-87 for Refined Benzene-545. 

(B) Internal or external floating roof vessels must be exempt
from all regulatory requirements of Title 40, Code of Federal Regulations,
Part 60 (40 CFR 60), Subparts K, Ka, and Kb. 

(C) Internal or external floating roof tanks must be exempt
from all of the regulatory requirements of Chapter 115 of this title. 

(D) Degassing or cleaning of storage tanks greater than one
million gallons of storage capacity is not authorized to operate under this
general permit. 

(E) Storage vessels shall not store waste mixtures of indeterminate
or variable composition which are subject to the regulatory requirements
of 40 CFR 60, Subpart Kb. 

(F) Stored materials shall have a maximum true vapor pressure:
(i) less than or equal to 11.1 psia, at storage conditions,
if stored in vessels or tanks subject to the regulatory requirements of 40
CFR 60, Subparts K and Ka; 

(ii) less than 11.1 psia, at storage conditions, if stored
in vessels or tanks subject to the regulatory requirements of 40 CFR 60,
Subparts Kb; and 

(iii) less than 11.0 psia, at storage conditions, if stored
in vessels or tanks after custody transfer and subject to the regulatory
requirements of Chapter 115 of this title. 

(9) Boilers and steam generators which are authorized
to operate under this General Operating Permit shall only be fired with natural
gas, and: 

(A) not have a rated capacity greater than 2,500 million British
thermal units per hour (MMBtu/hr) and constructed, reconstructed, or modified
on or before June 19, 1984; 

(B) not exceed 100 MMBtu/hr rated capacity if constructed,
reconstructed, or modified after June 19, 1984; or 

(C) not have a rated capacity for "opposed-fired," "front-fired,"
or "tangential-fired" steam generating unit of more than 600,000 pounds per
hour maximum continuous steam capacity in Matagorda County. (An "opposed-fired"
steam generating unit is defined as a unit having burners installed on two
opposite vertical firebox surfaces. A "front-fired" steam generating unit
is defined as a unit having all burners installed in a geometric array on
one vertical firebox surface. A "tangential-fired" steam generating unit
is defined as a unit having burners installed on all corners of the unit
at various elevations.) 

(10) Stationary gas turbines which are authorized
to operate under this General Operating Permit shall: 

(A) only be fired with pipeline quality natural gas; 

(B) not be fired with an emergency fuel; 

(C) not be supplied its fuel from an intermediate bulk storage
tank; 

(D) not use 40 CFR, sec.60.333(a) as a means to comply with
the requirements of 40 CFR 60, Subpart GG; 

(E) not exceed the manufacturer's rated base load at International
Standards Organization conditions of 30 megawatts if constructed, reconstructed,
or modified on or after October 3, 1977; and 

(F) not claim the exemption in 40 CFR, sec.60.332(i).  
(11) Emission units subject to the regulatory requirements
of 40 CFR 60, Subpart XX are not authorized to operate under this General
Operating Permit. 

(12) Emission units which are authorized to operate under
this General Operating Permit and are subject to Chapter 111 of this title
(relating to Control of Air Pollution From Visible Emissions and Particulate
Matter) may not claim an exemption from the continuous emission monitoring
requirements of sec.111.111(a)(3) of this title (relating to Requirements
for Specified Sources). 

(13) Loading racks at a benzene production facility shall
not be authorized to operate under this General Operating Permit unless these
loading racks load only the following: gasoline, crude oil, natural gas liquids,
or petroleum distillates. 

(14) Process vents which are authorized to operate under
this General Operating Permit shall not be subject to the emission 
specifications
of sec.115.121(c)(2)-(4) of this title (relating to Emission Specifications)
and the control requirements of sec.115.122(c)(2)-(4) of this title (relating
to Control Requirements). 

(15) Process heaters and furnaces which are authorized
to operate under this General Operating Permit shall only be fired with natural
gas. 

(b) General provisions. 

(1) The owner or operator shall comply with the requirements
relating to General Operating Permits which are contained in this chapter.
(2) The owner or operator shall comply with the conditions
listed in sec.122.143 of this title (relating to Permit Conditions). 
(3) Except for 40 CFR 63, emission units authorized to
operate under this General Operating Permit shall have all applicable 
requirements
codified in this subsection or subsection (c) of this section. 

(4) The following requirements concerning preconstruction
authorizations shall apply. 

(A) The requirements of preconstruction authorizations (new
source review permits) implemented through Chapter 116 of this title (relating
to Control of Air Pollution By Permits for New Construction or Modification)
are not incorporated in this General Operating Permit and will only be enforced
through Chapter 116 of this title. For purposes of this subchapter, 
preconstruction
authorizations include new source review permits, standard exemptions, standard
permits, flexible permits, special permits, and special exemptions. These
preconstruction authorizations shall be referenced in the General Operating
Permit application. Copies of preconstruction authorizations referenced in
the General Operating Permit application may be obtained from the appropriate
Texas Natural Resource Conservation Commission (TNRCC) regional office or
TNRCC central office in Austin. 

(B) The requirements of preconstruction authorizations referenced
in the General Operating Permit application are not eligible for the Permit
Shield provisions in sec.122.145 of this title (relating to Permit Content).
(5) For any unit subject to any subpart in 40 CFR
60, the owner or operator shall comply with the following unless otherwise
stated in the applicable subpart: 

(A) Section 60.1-Applicability; 

(B) Section 60.7-Notification and Recordkeeping; 

(C) Section 60.8-Performance Tests; 

(D) Section 60.9-Availability of Information; 

(E) Section 60.11-Compliance with Standards and Maintenance
Requirements; 

(F) Section 60.12-Circumvention; 

(G) Section 60.13-Monitoring Requirements; 

(H) Section 60.14-Modification; 

(I) Section 60.15-Reconstruction; and 

(J) Section 60.19-General Notification and Reporting Requirements.
(6) The owner or operator shall submit compliance
certifications to the commission at least every 12 months and, upon request,
to the EPA. 

(7) Owners or operators shall comply with the following
requirements of Chapter 111 of this title. 

(A) Visible emissions from stationary vents constructed on
or before January 31, 1972, shall not exceed 30% opacity averaged over a
six-minute period as required in sec.111.111(a)(1)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(1)(A) of this title
shall be determined as required in sec.111.111(a)(1)(F)(ii) of this title
by Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(B) Visible emissions from stationary vents constructed after
January 31, 1972, shall not exceed 20% opacity averaged over a six-minute
period as required in sec.111.111(a)(1)(B) of this title. Compliance with
the visible emission standard of sec.111.111(a)(1)(B) of this title shall
be determined as required in sec.111.111(a)(1)(F)(ii) of this title by
Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(C) Visible emissions from structures shall not exceed 30%
opacity for any six-minute period from any building, enclosed facility, or
other structure as required in sec.111.111(a)(7)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(7)(A) of this title
shall be determined as required in sec.111.111(a)(7)(B)(i) of this title
by Test Method 9 (40 CFR 60, Appendix A). 

(D) Visible emissions during the cleaning of a firebox or the
building of a new fire, soot blowing, equipment changes, ash removal, and
rapping of precipitators may exceed the limits set forth in sec.111.111
of this title for a period aggregating not more than six minutes in any 60
consecutive minutes, nor more than six hours in any ten-day period as required
in sec.111.111(a)(1)(E) of this title. This exemption shall not apply to
the emissions mass rate standard, as outlined in sec.111.151(a) of this
title (relating to Allowable Emissions Limits). 

(E) Visible emissions from all other sources not specified
in sec.111.111(a)(1), (4), or (7) of this title shall not exceed 30% opacity
for any six-minute period from any building, enclosed facility, or other
structure as required in sec.111.111(a)(8)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(8)(A) of this title
shall be determined by applying Test Method 9 (40 CFR 60, Appendix A) as
required in sec.111.111(a)(8)(B)(i) of this title. 

(F) Certification of opacity readers determining opacities
under Method 9 (as outlined in 40 CFR 60, Appendix A) to comply with 
sec.111.111(a)(1)(G)
of this title shall be accomplished by completing the TNRCC Visible Emissions
Evaluators Course, or approved agency equivalent, no more than 180 days before
the opacity reading. 

(G) Emission limits on nonagricultural processes are as follows.
(i) Emissions of particulate matter from any source may not
exceed the allowable rates specified in Table 1 as required in sec.111.151(a)
of this title. 

Figure 1: 30 TAC sec.122.513(b)(7)(G)(i) 

[sub]
e) less than the standard effective stack height (He), as determined
from Table 2, must reduce the allowable emission level by multiplying it
by [htype-name="sub">e[sub]e]
type-name="sup"> 2 as required in sec.111.151(b) of this title. 
Figure 2: 30 TAC sec.122.513(b)(7)(G)(ii) 

(iii) Effective stack height shall be calculated by the following
equation as required in sec.111.151(c) of this title. 

Figure 3: 30 TAC sec.122.513(b)(7)(G)(iii) 

(H) Open burning, as stated in sec.111.201 of this title
(relating to General Prohibition), shall not be authorized unless the following
requirements are satisfied: 

(i) Section 111.205 of this title (relating to Exception for
Fire Training); 

(ii) Section 111.209(3) of this title (relating to Exception
for Disposal Fires); 

(iii) Section 111.213 of this title (relating to Exception
for Hydrocarbon Burning); 

(iv) Section 111.219 of this title (relating to General Requirements
for Allowable Outdoor Burning); and 

(v) Section 111.221 of this title (relating to Responsibility
for Consequences of Outdoor Burning). 

(I) Abrasive blasting of water storage tanks performed by portable
operations shall not be authorized unless the following requirements are
satisfied:  

(i) Section 111.133(a)(1) and (2), (b), and (c) of this title
(relating to Testing Requirements); 

(ii) Section 111.135(a), (b), and (c)(1)-(4) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Lead);
(iii) Section 111.137(a), (b)(1)-(4), and (c) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Less
than 1.0% Lead); and 

(iv) Section 111.139(a) and (b) of this title (relating to
Exemptions). 

(8) For covered processes subject to Title 40,
Code of Federal Regulations, Part 68 (40 CFR 68) and specified in 40 CFR,
sec.68.10, the owner or operator shall comply with the requirements of
the Accidental Release Prevention Provisions in 40 CFR 68. The owner or operator
shall submit to the appropriate agency, either a compliance schedule for
meeting the requirements of 40 CFR 68 by the date provided in 40 CFR, 
sec.68.10(a),
or as part of the compliance certification submitted under sec.122.143(4)
of this title, a certification statement that the source is in compliance
with all requirements of 40 CFR 68, including the registration and submission
of a risk management plan. This general provision is enforceable only by
the Administrator of the EPA. 

(9) Owners and operators of a site subject to Title VI
of the FCAA shall meet the following requirements for protection of 
stratospheric
ozone which are enforceable only by the Administrator of the EPA. 

(A) Operation, servicing, maintenance, and repair on refrigeration
and non-motor vehicle air conditioning appliances using ozone-depleting 
refrigerants
on-site shall be conducted in accordance with Title 40, Code of Federal 
Regulations,
Part 82 (40 CFR 82), Subpart F. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
F. 

(B) Servicing, maintenance, and repair of fleet vehicle air
conditioning using ozone-depleting refrigerants shall be conducted in accordance
with 40 CFR 82, Subpart B. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
B.  

(10) Stationary gas turbines subject to 40 CFR 60,
Subpart GG shall only comply with the requirements of 40 CFR, sec.60.333(b)
for fuel sulfur content. 

(11) Stationary gas turbines subject to 40 CFR 60, Subpart
GG shall only fire natural gas and may be allowed to utilize a custom fuel
monitoring schedule, as an alternative provided for under 40 CFR, 
sec.60.334(b)(2),
as long as the provisions are at least as stringent as the following. 

(A) Monitoring of fuel nitrogen is not required while pipeline
quality natural gas is the only fuel fired in the gas turbine. 

(B) The fuel supplier or suppliers shall be identified for
the record during turbine startup, and at any time that the fuel supplier
or suppliers change. 

(C) Analysis for fuel sulfur content of the natural gas shall
be conducted using one of the approved ASTM Test Methods for the measurement
of sulfur in gaseous fuels, as referenced in 40 CFR, sec.60.335(d), or
the Gas Processors Association (GPA) test method entitled "Test for Hydrogen
Sulfide and Carbon Dioxide in Natural Gas Using Length of Stain Tubes." The
test methods are listed as follows: 

(i) ASTM D1072-80; 

(ii) ASTM D3031-81; 

(iii) ASTM D3246-81; 

(iv) ASTM D4084-82; or 

(v) GPA Standard 2377-86. 

(D) The owner or operator of a gas turbine who is not currently
utilizing an approved custom fuel monitoring schedule shall be required to
initially sample the fuel supply daily for a period of two weeks to establish,
after turbine startup, that the pipeline quality natural gas fuel supply
is low in sulfur content. 

(E) After the monitoring required in subparagraph (D) of this
paragraph, sulfur monitoring shall be conducted twice monthly for six months.
If this monitoring shows little variability in the fuel sulfur content, and
indicates consistent compliance with 40 CFR, sec.60.333(b), then sulfur
monitoring shall be conducted once per quarter for six quarters. 

(F) If after the monitoring required in subparagraph (E) of
this paragraph, or herein, the sulfur content of the fuel shows little 
variability
and, calculated as sulfur dioxide, represents consistent compliance with
the sulfur dioxide emission limits specified under 40 CFR, sec.60.333,
sample analysis shall be conducted twice per annum. This monitoring shall
be conducted during the first and third quarters of each calendar year. 
(G) Should any sulfur analysis as required in subparagraphs
(E) or (F) of this paragraph indicate noncompliance with 40 CFR, sec.60.333,
the owner or operator shall notify the commission within two weeks of such
excess emissions. The commission will then reexamine the custom schedule.
Sulfur monitoring shall be conducted weekly during the interim period when
this custom schedule is being reexamined. 

(H) If there is a change in fuel supply (supplier), the owner
or operator shall be required to sample the fuel daily for a period of two
weeks to re-establish for the record that the fuel supply is low in sulfur
content. If the fuel supply's low sulfur content is re-established, then
the custom fuel monitoring schedule can be resumed. 

(I) Stationary gas turbines that use the same supply of pipeline
quality natural gas to fuel multiple gas turbines may monitor the fuel sulfur
content at a single common location. 

(J) Applicants shall attach the custom fuel monitoring schedule
to their General Operating Permit application. 

(K) Compliance with the provisions of this paragraph fulfills
the requirement that custom schedules be approved by the Administrator, as
required by 40 CFR, sec.60.334(b)(2), before being used as an alternative
means of compliance. 

(12) Stationary gas turbines using water or steam
injection need not comply with the nitrogen oxide control requirements of
40 CFR, sec.60.332(a) during conditions when ice fog is deemed a traffic
hazard by the owner or operator of the stationary gas turbine. 

(13) The owner or operator of sites subject to the provisions
of this chapter that are affected by the requirements of the undesignated
head Loading and Unloading of Volatile Organic Compounds in Chapter 115,
Subchapter C of this title (relating to Volatile Organic Compound Transfer
Operations), shall comply with sec.115.212(c)(2) and (3)(C) of this title
(relating to Control Requirements). 

(14) The owner or operator shall keep records as required
in 40 CFR, sec.61.246(i) if claiming the exemption in 40 CFR, sec.61.110(c)(2),
pertaining to National Emission Standard for Equipment Leaks (Fugitive Emission
Sources) of Benzene. 

(15) The owner or operator of a sweetening unit with a
design capacity greater than or equal to 2.0 long tons per day (LTPD) that
operates at less than 2.0 LTPD, may choose to limit the sulfur feed rate,
i.e., the hydrogen sulfide (Htype-name="sub">2S) in the acid
gas (expressed as sulfur) from the sweetening unit, to less than 2.0 LTPD.
For those owners or operators who choose to do so, the requirements of 
sec.122.511(b)(18)
of this title (relating to Oil and Gas General Operating Permit - Brazoria,
Chambers, Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Hardin,
Harris, Jefferson, Liberty, Montgomery, Orange, Tarrant, and Waller Counties)
shall apply. 

(16) Owners or operators who claim any of the exemptions
stated 40 CFR, sec.60.332(e), (g), (h), (j), or (l) shall maintain records
to prove their exemption status in lieu of performing the monitoring, 
recordkeeping,
reporting, and testing requirements specified in 40 CFR 60, Subpart GG. 
Compliance
with this paragraph is deemed compliance with the nitrogen oxide emission
limit's monitoring, recordkeeping, reporting, and testing requirements of
40 CFR 60, Subpart GG in accordance with the Permit Shield provisions in
sec.122.145 of this title. 

(17) Upon the granting of this General Operating Permit,
detailed applicability determinations and the underlying basis for those
determinations in the General Operating Permit application submitted to comply
with the requirements of this chapter shall become conditions under which
the owner or operator shall operate. 

(c) Permit tables. 

(1) The permit table which lists the requirements for Stationary
Gas Turbines affected by 40 CFR 60, Subpart GG is contained in sec.122.511(c)(1)
of this title. 

(2) The permit table which lists the requirements for
Storage Vessels affected by 40 CFR 60, Subparts K and Ka is contained in
sec.122.511(c)(2) of this title. 

(3) The permit table which lists the requirements for
Storage Vessels affected by 40 CFR 60, Subpart Kb is contained in 
sec.122.511(c)(3)
of this title. 

(4) The following permit table lists the requirements
for Storage Vessels affected by Chapter 115 of this title. 

Figure 4: 30 TAC sec.122.513(c)(4) 

(5) The permit table which lists the requirements for
Gas Sweetening Units Not Utilizing Sulfur Recovery affected by 40 CFR 60,
Subpart LLL is contained in sec.122.511(c)(5) of this title. 

(6) The permit table which lists the requirements for
Natural Gas Processing Plant Fugitive Emissions affected by 40 CFR 60, Subpart
KKK is contained in sec.122.511(c)(6) of this title. 

(7) The permit table which lists the requirements for
Flares affected by 40 CFR 60, Subpart A is contained in sec.122.511(c)(8)
of this title. 

(8) The permit table which lists the requirements for
Flares affected by Chapter 111 of this title is contained in sec.122.511(c)(9)
of this title. 

(9) The permit table which lists the requirements for
Gas Sweetening Units Utilizing Sulfur Recovery affected by 40 CFR 60, Subpart
LLL is contained in sec.122.511(c)(10) of this title. 

(10) The permit table which lists the requirements for
Gas Sweetening Units Utilizing Sulfur Recovery affected by Chapter 112 of
this title (relating to Sulfur Compounds) is contained in sec.122.511(c)(11)
of this title. 

(11) The permit table which lists the requirements for
Stationary Vents affected by Chapter 111 of this title is contained in 
sec.122.511(c)(12)
of this title. 

(12) The following permit table lists the requirements
for Stationary Vents affected by Chapter 115 of this title. 

Figure 5 : 30 TAC sec.122.513(c)(12) 

(13) The permit table which lists the requirements for
Boilers/Steam Generators affected by 40 CFR 60, Subparts Db and Dc is contained
in sec.122.511(c)(15) of this title. 

(14) The following permit table lists the requirements
for Non-Marine VOC Loading/Unloading Operations affected by Chapter 115 of
this title. 

Figure 6: 30 TAC sec.122.513(c)(14) 

(15) The following permit table lists the requirements
for VOC Water Separators affected by Chapter 115 of this title. 

Figure 7: 30 TAC sec.122.513(c)(15)

sec.122.514.Oil and Gas General Operating Permit-All
Texas Counties Except for Aransas, Bexar, Brazoria, Calhoun, Chambers, Collin,
Dallas, Denton, El Paso, Fort Bend, Galveston, Gregg, Hardin, Harris, Jefferson,
Liberty, Matagorda, Montgomery, San Patricio, Tarrant, Travis, Victoria,
and Waller Counties. 
(a) Qualification criteria. Emission units authorized to operate
under this General Operating Permit shall meet each of the following criteria.
(1) Emission units which are authorized to operate under this
General Operating Permit shall not have a federal prevention of significant
deterioration permit or a federal nonattainment permit. 

(2) Emission units which are authorized to operate under
this General Operating Permit shall not use an alternative means of compliance
which must be approved by the executive director of the commission or the
Administrator of the United States Environmental Protection Agency (EPA).
(3) At the time of application submittal, emission units
which are authorized to operate under this General Operating Permit shall
be in compliance with all requirements as stated in subsections (b) and (c)
of this section. 

(4) Equipment in benzene service is not authorized to
operate under this General Operating Permit unless the plant site is designed
to produce or use less than 1,000 megagrams (1,100 tons) of benzene per year
as determined according to the provisions of Title 40, Code of Federal 
Regulations,
Part 61 (40 CFR 61) in 40 CFR, sec.61.245(d). 

(5) Cooling towers which are authorized to operate under
this General Operating Permit shall not have operated with chromium-based
water treatment chemicals on or after September 8, 1994, in accordance with
Title 40, Code of Federal Regulations, Part 63 (40 CFR 63), Subpart Q. 
(6) For storage vessels, tanks, or containers which are
authorized to operate under this General Operating Permit, the following
subparagraphs shall apply. 

(A) The storage vessels shall not store benzene having a specific
gravity within the range of specific gravities specified in American Society
for Testing and Materials (ASTM) D836-84 for Industrial Grade Benzene, ASTM
D835-85 for Refined Benzene-485, ASTM D2359-85a for Refined Benzene-535,
and ASTM D4734-87 for Refined Benzene-545. 

(B) Internal or external floating roof vessels must be exempt
from all regulatory requirements of Title 40, Code of Federal Regulations,
Part 60 (40 CFR 60), Subparts K, Ka, and Kb. 

(C) Storage vessels shall not store waste mixtures of indeterminate
or variable composition which are subject to the regulatory requirements
of 40 CFR 60, Subpart Kb. 

(D) Stored materials shall have a maximum true vapor pressure:
(i) less than or equal to 11.1 psia, at storage conditions,
if stored in vessels or tanks subject to the regulatory requirements of 40
CFR 60, Subparts K and Ka; and 

(ii) less than 11.1 psia, at storage conditions, if stored
in vessels or tanks subject to the regulatory requirements of 40 CFR 60,
Subparts Kb. 

(7) Boilers and steam generators which are authorized
to operate under this General Operating Permit shall only be fired with natural
gas, and: 

(A) not have a rated capacity greater than 2,500 million British
thermal units per hour (MMBtu/hr) and constructed, reconstructed, or modified
on or before June 19, 1984; 

(B) not exceed 100 MMBtu/hr rated capacity if constructed,
reconstructed, or modified after June 19, 1984; or 

(C) not have a rated capacity for "opposed-fired," "front-fired,"
or "tangential-fired" steam generating unit of more than 600,000 pounds per
hour maximum continuous steam capacity in Austin, Colorado, Cooke, Ellis,
Erath, Fannin, Grayson, Hood, Hunt, Johnson, Kaufman, Navarro, Palo Pinto,
Parker, Rockwall, Somervell, Wharton, and Wise Counties. (An "opposed-fired"
steam generating unit is defined as a unit having burners installed on two
opposite vertical firebox surfaces. A "front-fired" steam generating unit
is defined as a unit having all burners installed in a geometric array on
one vertical firebox surface. A "tangential-fired" steam generating unit
is defined as a unit having burners installed on all corners of the unit
at various elevations.) 

(8) Stationary gas turbines which are authorized
to operate under this General Operating Permit shall: 

(A) only be fired with pipeline quality natural gas; 

(B) not be fired with an emergency fuel; 

(C) not be supplied its fuel from an intermediate bulk storage
tank; 

(D) not use 40 CFR, sec.60.333(a) as a means to comply with
the requirements of 40 CFR 60, Subpart GG; 

(E) not exceed the manufacturer's rated base load at International
Standards Organization conditions of 30 megawatts if constructed, reconstructed,
or modified on or after October 3, 1977; and 

(F) not claim the exemption in 40 CFR, sec.60.332(i). 

(9) Emission units subject to the regulatory requirements
of 40 CFR 60, Subpart XX are not authorized to operate under this General
Operating Permit. 

(10) Emission units which are authorized to operate under
this General Operating Permit and are subject to Chapter 111 of this title
(relating to Control of Air Pollution From Visible Emissions and Particulate
Matter) may not claim an exemption from the continuous emission monitoring
requirements of sec.111.111(a)(3) of this title (relating to Requirements
for Specified Sources). 

(11) Loading racks at a benzene production facility shall
not be authorized to operate under this General Operating Permit unless these
loading racks load only the following: gasoline, crude oil, natural gas liquids,
or petroleum distillates. 

(12) Process heaters and furnaces which are authorized
to operate under this General Operating Permit shall only be fired with natural
gas. 

(b) General provisions. 

(1) The owner or operator shall comply with the requirements
relating to General Operating Permits which are contained in this chapter.
(2) The owner or operator shall comply with the conditions
listed in sec.122.143 of this title (relating to Permit Conditions). 
(3) Except for 40 CFR 63, emission units authorized to
operate under this General Operating Permit shall have all applicable 
requirements
codified in this subsection or subsection (c) of this section. 

(4) The following requirements concerning preconstruction
authorizations shall apply. 

(A) The requirements of preconstruction authorizations (new
source review permits) implemented through Chapter 116 of this title (relating
to Control of Air Pollution By Permits for New Construction or Modification)
are not incorporated in this General Operating Permit and will only be enforced
through Chapter 116 of this title. For purposes of this subchapter, 
preconstruction
authorizations include new source review permits, standard exemptions, standard
permits, flexible permits, special permits, and special exemptions. These
preconstruction authorizations shall be referenced in the General Operating
Permit application. Copies of preconstruction authorizations referenced in
the General Operating Permit application may be obtained from the appropriate
Texas Natural Resource Conservation Commission (TNRCC) regional office or
TNRCC central office in Austin. 

(B) The requirements of preconstruction authorizations referenced
in the General Operating Permit application are not eligible for the Permit
Shield provisions in sec.122.145 of this title (relating to Permit Content).
(5) For any unit subject to any subpart in 40 CFR
60, the owner or operator shall comply with the following unless otherwise
stated in the applicable subpart: 

(A) Section 60.1-Applicability; 

(B) Section 60.7-Notification and Recordkeeping; 

(C) Section 60.8-Performance Tests; 

(D) Section 60.9-Availability of Information; 

(E) Section 60.11-Compliance with Standards and Maintenance
Requirements; 

(F) Section 60.12-Circumvention; 

(G) Section 60.13-Monitoring Requirements; 

(H) Section 60.14-Modification; 

(I) Section 60.15-Reconstruction; and 

(J) Section 60.19-General Notification and Reporting Requirements.
(6) The owner or operator shall submit compliance
certifications to the commission at least every 12 months and, upon request,
to the EPA. 

(7) Owners or operators shall comply with the following
requirements of Chapter 111 of this title. 

(A) Visible emissions from stationary vents constructed on
or before January 31, 1972, shall not exceed 30% opacity averaged over a
six-minute period as required in sec.111.111(a)(1)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(1)(A) of this title
shall be determined as required in sec.111.111(a)(1)(F)(ii) of this title
by Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(B) Visible emissions from stationary vents constructed after
January 31, 1972, shall not exceed 20% opacity averaged over a six-minute
period as required in sec.111.111(a)(1)(B) of this title. Compliance with
the visible emission standard of sec.111.111(a)(1)(B) of this title shall
be determined as required in sec.111.111(a)(1)(F)(ii) of this title by
Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(C) Visible emissions from structures shall not exceed 30%
opacity for any six-minute period from any building, enclosed facility, or
other structure as required in sec.111.111(a)(7)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(7)(A) of this title
shall be determined as required in sec.111.111(a)(7)(B)(i) of this title
by Test Method 9 (40 CFR 60, Appendix A). 

(D) Visible emissions during the cleaning of a firebox or the
building of a new fire, soot blowing, equipment changes, ash removal, and
rapping of precipitators may exceed the limits set forth in sec.111.111
of this title for a period aggregating not more than six minutes in any 60
consecutive minutes, nor more than six hours in any ten-day period as required
in sec.111.111(a)(1)(E) of this title. This exemption shall not apply to
the emissions mass rate standard, as outlined in sec.111.151(a) of this
title (relating to Allowable Emissions Limits). 

(E) Visible emissions from all other sources not specified
in sec.111.111(a)(1), (4), or (7) of this title shall not exceed 30% opacity
for any six-minute period from any building, enclosed facility, or other
structure as required in sec.111.111(a)(8)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(8)(A) of this title
shall be determined by applying Test Method 9 (40 CFR 60, Appendix A) as
required in sec.111.111(a)(8)(B)(i) of this title. 

(F) Certification of opacity readers determining opacities
under Method 9 (as outlined in 40 CFR 60, Appendix A) to comply with 
sec.111.111(a)(1)(G)
of this title shall be accomplished by completing the TNRCC Visible Emissions
Evaluators Course, or approved agency equivalent, no more than 180 days before
the opacity reading. 

(G) Emission limits on nonagricultural processes are as follows.
(i) Emissions of particulate matter from any source may not
exceed the allowable rates specified in Table 1 as required in sec.111.151(a)
of this title. 

Figure 1 : 30 TAC sec.122.514(b)(7)(G)(i) 

[sub]
e[sub]
e), as determined from Table 2, must reduce the allowable emission
level by multiplying it by [htype-name="sub">e[sub]
e[sup]2 as required in sec.111.151(b) of
this title.

Figure 2 : 30 TAC sec.122.514(b)(7)(G)(ii) 

(iii) Effective stack height shall be calculated by the following
equation as required in sec.111.151(c) of this title: 

Figure 3 : 30 TAC sec.122.514(b)(7)(G)(iii) 

(H) Open burning, as stated in sec.111.201 of this title
(relating to General Prohibition), shall not be authorized unless the following
requirements are satisfied: 

(i) Section 111.205 of this title (relating to Exception for
Fire Training); 

(ii) Section 111.209(3) of this title (relating to Exception
for Disposal Fires); 

(iii) Section 111.213 of this title (relating to Exception
for Hydrocarbon Burning); 

(iv) Section 111.219 of this title (relating to General Requirements
for Allowable Outdoor Burning); and 

(v) Section 111.221 of this title (relating to Responsibility
for Consequences of Outdoor Burning). 

(I) Abrasive blasting of water storage tanks performed by portable
operations shall not be authorized unless the following requirements are
satisfied:  

(i) Section 111.133(a)(1) and (2), (b), and (c) of this title
(relating to Testing Requirements); 

(ii) Section 111.135(a), (b), and (c)(1)-(4) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Lead);
(iii) Section 111.137(a), (b)(1)-(4), and (c) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Less
than 1.0% Lead); and 

(iv) Section 111.139(a) and (b) of this title (relating to
Exemptions). 

(8) For covered processes subject to Title 40,
Code of Federal Regulations, Part 68 (40 CFR 68) and specified in 40 CFR,
sec.68.10, the owner or operator shall comply with the requirements of
the Accidental Release Prevention Provisions in 40 CFR 68. The owner or operator
shall submit to the appropriate agency, either a compliance schedule for
meeting the requirements of 40 CFR 68 by the date provided in 40 CFR, 
sec.68.10(a),
or as part of the compliance certification submitted under sec.122.143(4)
of this title, a certification statement that the source is in compliance
with all requirements of 40 CFR 68, including the registration and submission
of a risk management plan. This general provision is enforceable only by
the Administrator of the EPA. 

(9) Owners and operators of a site subject to Title VI
of the FCAA shall meet the following requirements for protection of 
stratospheric
ozone which are enforceable only by the Administrator of the EPA. 

(A) Operation, servicing, maintenance, and repair on refrigeration
and non-motor vehicle air conditioning appliances using ozone-depleting 
refrigerants
on-site shall be conducted in accordance with Title 40, Code of Federal 
Regulations,
Part 82 (40 CFR 82), Subpart F. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
F. 

(B) Servicing, maintenance, and repair of fleet vehicle air
conditioning using ozone-depleting refrigerants shall be conducted in accordance
with 40 CFR 82, Subpart B. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
B.  

(10) Stationary gas turbines subject to 40 CFR 60,
Subpart GG shall only comply with the requirements of 40 CFR, sec.60.333(b)
for fuel sulfur content. 

(11) Stationary gas turbines subject to 40 CFR 60, Subpart
GG shall only fire natural gas and may be allowed to utilize a custom fuel
monitoring schedule, as an alternative provided for under 40 CFR, 
sec.60.334(b)(2),
as long as the provisions are at least as stringent as the following. 

(A) Monitoring of fuel nitrogen is not required while pipeline
quality natural gas is the only fuel fired in the gas turbine. 

(B) The fuel supplier or suppliers shall be identified for
the record during turbine startup, and at any time that the fuel supplier
or suppliers change. 

(C) Analysis for fuel sulfur content of the natural gas shall
be conducted using one of the approved ASTM Test Methods for the measurement
of sulfur in gaseous fuels, as referenced in 40 CFR, sec.60.335(d), or
the Gas Processors Association (GPA) test method entitled "Test for Hydrogen
Sulfide and Carbon Dioxide in Natural Gas Using Length of Stain Tubes." The
test methods are listed as follows: 

(i) ASTM D1072-80; 

(ii) ASTM D3031-81; 

(iii) ASTM D3246-81; 

(iv) ASTM D4084-82; or 

(v) GPA Standard 2377-86. 

(D) The owner or operator of a gas turbine who is not currently
utilizing an approved custom fuel monitoring schedule shall be required to
initially sample the fuel supply daily for a period of two weeks to establish,
after turbine startup, that the pipeline quality natural gas fuel supply
is low in sulfur content. 

(E) After the monitoring required in subparagraph (D) of this
paragraph, sulfur monitoring shall be conducted twice monthly for six months.
If this monitoring shows little variability in the fuel sulfur content, and
indicates consistent compliance with 40 CFR, sec.60.333(b), then sulfur
monitoring shall be conducted once per quarter for six quarters. 

(F) If after the monitoring required in subparagraph (E) of
this paragraph, or herein, the sulfur content of the fuel shows little 
variability
and, calculated as sulfur dioxide, represents consistent compliance with
the sulfur dioxide emission limits specified under 40 CFR, sec.60.333,
sample analysis shall be conducted twice per annum. This monitoring shall
be conducted during the first and third quarters of each calendar year. 
(G) Should any sulfur analysis as required in subparagraphs
(E) or (F) of this paragraph indicate noncompliance with 40 CFR, sec.60.333,
the owner or operator shall notify the commission within two weeks of such
excess emissions. The commission will then reexamine the custom schedule.
Sulfur monitoring shall be conducted weekly during the interim period when
this custom schedule is being reexamined. 

(H) If there is a change in fuel supply (supplier), the owner
or operator shall be required to sample the fuel daily for a period of two
weeks to re-establish for the record that the fuel supply is low in sulfur
content. If the fuel supply's low sulfur content is re-established, then
the custom fuel monitoring schedule can be resumed. 

(I) Stationary gas turbines that use the same supply of pipeline
quality natural gas to fuel multiple gas turbines may monitor the fuel sulfur
content at a single common location. 

(J) Applicants shall attach the custom fuel monitoring schedule
to their General Operating Permit application. 

(K) Compliance with the provisions of this paragraph fulfills
the requirement that custom schedules be approved by the Administrator, as
required by 40 CFR, sec.60.334(b)(2), before being used as an alternative
means of compliance. 

(12) Stationary gas turbines using water or steam
injection need not comply with the nitrogen oxide control requirements of
40 CFR, sec.60.332(a) during conditions when ice fog is deemed a traffic
hazard by the owner or operator of the stationary gas turbine. 

(13) The owner or operator shall keep records as required
in 40 CFR, sec.61.246(i) if claiming the exemption in 40 CFR, sec.61.110(c)(2),
pertaining to National Emission Standard for Equipment Leaks (Fugitive Emission
Sources) of Benzene. 

(14) The owner or operator of a sweetening unit with a
design capacity greater than or equal to 2.0 long tons per day (LTPD) that
operates at less than 2.0 LTPD, may choose to limit the sulfur feed rate,
i.e., the hydrogen sulfide (Htype-name="sub">2S) in the acid
gas (expressed as sulfur) from the sweetening unit, to less than 2.0 LTPD.
For those owners or operators who choose to do so, the requirements of 
sec.122.511(b)(18)
of this title (relating to Oil and Gas General Operating Permit - Brazoria,
Chambers, Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Hardin,
Harris, Jefferson, Liberty, Montgomery, Orange, Tarrant, and Waller Counties)
shall apply. 

(15) Owners or operators who claim any of the exemptions
stated 40 CFR, sec.60.332(e), (g), (h), (j), or (l) shall maintain records
to prove their exemption status in lieu of performing the monitoring, 
recordkeeping,
reporting, and testing requirements specified in 40 CFR 60, Subpart GG. 
Compliance
with this paragraph is deemed compliance with the nitrogen oxide emission
limit's monitoring, recordkeeping, reporting, and testing requirements of
40 CFR 60, Subpart GG in accordance with the Permit Shield provisions in
sec.122.145 of this title. 

(16) Upon the granting of this General Operating Permit,
detailed applicability determinations and the underlying basis for those
determinations in the General Operating Permit application submitted to comply
with the requirements of this chapter shall become conditions under which
the owner or operator shall operate. 

(c) Permit tables. 

(1) The permit table which lists the requirements for Stationary
Gas Turbines affected by 40 CFR 60, Subpart GG is contained in sec.122.511(c)(1)
of this title. 

(2) The permit table which lists the requirements for
Storage Vessels affected by 40 CFR 60, Subparts K and Ka is contained in
sec.122.511(c)(2) of this title. 

(3) The permit table which lists the requirements for
Storage Vessels affected by 40 CFR 60, Subpart Kb is contained in 
sec.122.511(c)(3)
of this title. 

(4) The permit table which lists the requirements for
Gas Sweetening Units Not Utilizing Sulfur Recovery affected by 40 CFR 60,
Subpart LLL is contained in sec.122.511(c)(5) of this title. 

(5) The permit table which lists the requirements for
Natural Gas Processing Plant Fugitive Emissions affected by 40 CFR 60, Subpart
KKK is contained in sec.122.511(c)(6) of this title. 

(6) The permit table which lists the requirements for
Flares affected by 40 CFR 60, Subpart A is contained in sec.122.511(c)(8)
of this title. 

(7) The permit table which lists the requirements for
Flares affected by Chapter 111 of this title is contained in sec.122.511(c)(9)
of this title. 

(8) The permit table which lists the requirements for
Gas Sweetening Units Utilizing Sulfur Recovery affected by 40 CFR 60, Subpart
LLL is contained in sec.122.511(c)(10) of this title. 

(9) The permit table which lists the requirements for
Gas Sweetening Units Utilizing Sulfur Recovery affected by Chapter 112 of
this title (relating to Sulfur Compounds) is contained in sec.122.511(c)(11)
of this title. 

(10) The permit table which lists the requirements for
Stationary Vents affected by Chapter 111 of this title is contained in 
sec.122.511(c)(12)
of this title. 

(11) The permit table which lists the requirements for
Boilers/Steam Generators affected by 40 CFR 60, Subparts Db and Dc is contained
in sec.122.511(c)(15) of this title.  

sec.122.515.Bulk Fuel Storage Terminal General Operating
Permit. 
(a) Qualification criteria. Emission units authorized to operate
under this General Operating Permit shall meet each of the following criteria.
(1) Emission units which are authorized to operate under this
General Operating Permit shall not have a federal prevention of significant
deterioration permit or a federal nonattainment permit. 

(2) Emission units which are authorized to operate under
this General Operating Permit shall not use an alternative means of compliance
which must be approved by the executive director of the commission or the
Administrator of the United States Environmental Protection Agency (EPA).
(3) At the time of application submittal, emission units
which are authorized to operate under this General Operating Permit shall
be in compliance with all requirements as stated in subsections (b) and (c)
of this section. 

(4) Loading racks at a benzene production facility or
bulk terminal shall not be authorized to operate under this General Operating
Permit unless these loading racks load only the following: gasoline, crude
oil, natural gas liquids, or petroleum distillates. 

(5) Emission units in marine terminal loading and unloading
operations are not authorized to operate under this General Operating Permit.
(6) For storage vessels, tanks, or containers which are
authorized to operate under this General Operating Permit: 

(A) the storage vessels shall not store benzene having a specific
gravity within the range of specific gravities specified in American Society
for Testing and Materials (ASTM) D836-84 for Industrial Grade Benzene, ASTM
D835-85 for Refined Benzene-485, ASTM D2359-85a for Refined Benzene-535,
and ASTM D4734-87 for Refined Benzene-545; or 

(B) petroleum liquid, condensate, crude oil, or volatile organic
liquid shall not be stored prior to custody transfer. 

(7) Degreasing operations which are authorized under
this General Operating Permit and located on any property in Gregg, Nueces,
or Victoria Counties shall not emit, when uncontrolled, a combined weight
of volatile organic compounds (VOC) greater than or equal to 550 pounds in
any consecutive 24-hour period. 

(8) Degreasing operations which are authorized to operate
under this General Operating Permit shall not utilize the following: 

(A) a VOC for open-top vapor or conveyorized degreasing in
counties where the regulatory requirements of Chapter 115 of this title 
(relating
to Control of Air Pollution From Volatile Organic Compounds) are applicable;
or 

(B) individual batch vapor, in-line vapor, in-line cold, or
batch cold solvent cleaning machines subject to the regulatory requirements
of Title 40, Code of Federal Regulations, Part 63, Subpart T. 

(9) VOC water separators which are authorized to
operate under this General Operating Permit and are located in the 
Houston/Galveston,
Beaumont/Port Arthur, Dallas/Fort Worth, or El Paso ozone nonattainment areas,
shall not have been subject to the control requirements of sec.115.132(a)(1)-(3)
of this title (relating to Control Requirements) at any time since July 17,
1991, which later were exempted from these control requirements by satisfying
the conditions of sec.115.132(a)(4)(A) and (B) of this title. 

(10) VOC loading/unloading which is authorized to operate
under this General Operating Permit and occurs in the Houston/Galveston,
Beaumont/Port Arthur, Dallas/Fort Worth, or El Paso ozone nonattainment areas,
shall not have been subject to the control requirements of sec.115.212(a)(2)
and (4)-(6) of this title (relating to Control Requirements) at any time
since November 15, 1996, which later were exempted from these control 
requirements
by satisfying the conditions of sec.115.212(a)(12) of this title. 

(11) Emission units which are authorized to operate under
this General Operating Permit and are subject to Chapter 111 of this title
(relating to Control of Air Pollution From Visible Emissions and Particulate
Matter) may not claim an exemption from the continuous emission monitoring
requirements of sec.111.111(a)(3) of this title (relating to Requirements
for Specified Sources). 

(12) Surface coating operations, other than those performed
on equipment that is located on-site and in-place, which are authorized to
operate under this General Operating Permit shall not emit, when uncontrolled,
the following: 

(A) a combined weight of VOC greater than or equal to three
pounds per hour and 15 pounds in any consecutive 24-hour period at sites
located in the Houston/Galveston, Beaumont/Port Arthur, Dallas/Fort Worth,
or El Paso ozone nonattainment areas; or 

(B) a combined weight of VOC greater than or equal to 550 pounds
(249.5 kilograms) in any consecutive 24-hour period at sites located in Gregg,
Nueces, or Victoria Counties. 

(13) Equipment in benzene service is not authorized
to operate under this General Operating Permit unless the plant site is designed
to produce or use less than 1,000 megagrams (1,100 tons) of benzene per year
as determined according to the provisions of Title 40, Code of Federal 
Regulations,
Part 61 (40 CFR 61) in 40 CFR, sec.61.245(d). 

(14) Process vents which are authorized to operate under
this General Operating Permit and are located in the Houston/Galveston, 
Beaumont/Port
Arthur, Dallas/Fort Worth, or El Paso ozone nonattainment areas shall not
have been subject to the emission specifications of sec.115.121(a)(1) of
this title (relating to Emission Specifications) and the control requirements
of sec.115.122(a)(1) of this title (relating to Control Requirements) at
any time since July 17, 1991, which later were exempted from control 
requirements
by satisfying the conditions of sec.115.122(a)(4)(A) and (B) of this title.
(b) General provisions. 

(1) The owner or operator shall comply with the requirements
relating to General Operating Permits which are contained in this chapter.
(2) The owner or operator shall comply with the conditions
listed in sec.122.143 of this title (relating to Permit Conditions). 
(3) Except for Title 40, Code of Federal Regulations,
Part 63, emission units authorized to operate under this General Operating
Permit shall have all applicable requirements codified in this subsection
or subsection (c) of this section. 

(4) The following requirements concerning preconstruction
authorizations shall apply. 

(A) The requirements of preconstruction authorizations (new
source review permits) implemented through Chapter 116 of this title (relating
to Control of Air Pollution By Permits for New Construction or Modification)
are not incorporated in this General Operating Permit and will only be enforced
through Chapter 116 of this title. For purposes of this subchapter, 
preconstruction
authorizations include new source review permits, standard exemptions, standard
permits, flexible permits, special permits, and special exemptions. These
preconstruction authorizations shall be referenced in the General Operating
Permit application. Copies of preconstruction authorizations referenced in
the General Operating Permit application may be obtained from the appropriate
Texas Natural Resource Conservation Commission (TNRCC) regional office or
TNRCC central office in Austin. 

(B) The requirements of preconstruction authorizations referenced
in the General Operating Permit application are not eligible for the Permit
Shield provisions in sec.122.145 of this title (relating to Permit Content).
(5) For any unit subject to any subpart in Title
40, Code of Federal Regulations, Part 60 (40 CFR 60), the owner or operator
shall comply with the following unless otherwise stated in the applicable
subpart: 

(A) Section 60.1-Applicability; 

(B) Section 60.7-Notification and Recordkeeping; 

(C) Section 60.8-Performance Tests; 

(D) Section 60.9-Availability of Information; 

(E) Section 60.11-Compliance with Standards and Maintenance
Requirements; 

(F) Section 60.12-Circumvention; 

(G) Section 60.13-Monitoring Requirements; 

(H) Section 60.14-Modification; 

(I) Section 60.15-Reconstruction; and 

(J) Section 60.19-General Notification and Reporting Requirements.
(6) The owner or operator shall submit compliance
certifications to the commission at least every 12 months and, upon request,
to the EPA. 

(7) Owners or operators shall comply with the following
requirements of Chapter 111 of this title. 

(A) Visible emissions from stationary vents constructed on
or before January 31, 1972, shall not exceed 30% opacity averaged over a
six-minute period as required in sec.111.111(a)(1)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(1)(A) of this title
shall be determined as required in sec.111.111(a)(1)(F)(ii) of this title
by Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(B) Visible emissions from stationary vents constructed after
January 31, 1972, shall not exceed 20% opacity averaged over a six-minute
period as required in sec.111.111(a)(1)(B) of this title. Compliance with
the visible emission standard of sec.111.111(a)(1)(B) of this title shall
be determined as required in sec.111.111(a)(1)(F)(ii) of this title by
Test Method 9 (40 CFR 60, Appendix A), or as required in 
sec.111.111(a)(1)(F)(iii)
of this title by Alternate Method 1 to Method 9, Light Detection and Ranging
(40 CFR 60, Appendix A). 

(C) Visible emissions from structures shall not exceed 30%
opacity for any six-minute period from any building, enclosed facility, or
other structure as required in sec.111.111(a)(7)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(7)(A) of this title
shall be determined as required in sec.111.111(a)(7)(B)(i) of this title
by Test Method 9 (40 CFR 60, Appendix A). 

(D) Visible emissions from all other sources not specified
in sec.111.111(a)(1), (4), or (7) of this title shall not exceed 30% opacity
for any six-minute period from any building, enclosed facility, or other
structure as required in sec.111.111(a)(8)(A) of this title. Compliance
with the visible emission standard of sec.111.111(a)(8)(A) of this title
shall be determined by applying Test Method 9 (40 CFR 60, Appendix A) as
required in sec.111.111(a)(8)(B)(i) of this title. 

(E) Certification of opacity readers determining opacities
under Method 9 (as outlined in 40 CFR 60, Appendix A) to comply with 
sec.111.111(a)(1)(G)
of this title shall be accomplished by completing the TNRCC Visible Emissions
Evaluators Course, or approved agency equivalent, no more than 180 days before
the opacity reading. 

(F) Emission limits on nonagricultural processes are as follows.
(i) Emissions of particulate matter from any source may not
exceed the allowable rates specified in Table 1 as required in sec.111.151(a)
of this title (relating to Allowable Emissions Limits).

Figure 1: 30 TAC sec.122.515(b)(7)(F)(i) 

[sub]
e[sub]
e), as determined from Table 2, must reduce the allowable emission
level by multiplying it by [htype-name="sub">e[sub]
e[sup]2 as required in sec.111.151(b) of
this title. 

Figure 2 : 30 TAC sec.122.515(b)(7)(F)(ii) 

(iii) Effective stack height shall be calculated by the following
equation as required in sec.111.151(c) of this title: sec.122.515(b)(7)(F)(iii)
Figure 3 : 30 TAC  

(G) Open burning, as stated in sec.111.201 of this title
(relating to General Prohibition), shall not be authorized unless the following
requirements are satisfied: 

(i) Section 111.205 of this title (relating to Exception for
Fire Training); 

(ii) Section 111.209(3) of this title (relating to Exception
for Disposal Fires); 

(iii) Section 111.213 of this title (relating to Exception
for Hydrocarbon Burning); 

(iv) Section 111.219 of this title (relating to General Requirements
for Allowable Outdoor Burning); and 

(v) Section 111.221 of this title (relating to Responsibility
for Consequences of Outdoor Burning). 

(H) Owners or operators of sites subject to the provisions
of this chapter in which the sites have Materials Handling, Construction,
Roads, Streets, Alleys, and Parking Lots shall comply with the requirements
of sec.sec.111.143, 111.145, 111.147, and 111.149 of this title (relating
to Materials Handling; Construction and Demolition; Roads, Streets, and Alleys;
and Parking Lots) if they are located in the following areas: 

(i) the City of El Paso, including the Fort Bliss Military
Reservation, except for training areas as referenced in sec.111.141 of
this title (relating to Geographic Areas of Application and Date of Compliance);
(ii) the area of Harris County located inside Beltway 8 (Sam
Houston Tollway); or 

(iii) the area of Nueces County outlined in the Group II State
Implementation Plan for Inhalable Particulate Matter. 

(I) Abrasive blasting of water storage tanks performed by portable
operations shall not be authorized unless the following requirements are
satisfied:  

(i) Section 111.133(a)(1) and (2), (b), and (c) of this title
(relating to Testing Requirements); 

(ii) Section 111.135(a), (b), and (c)(1)-(4) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Lead);
(iii) Section 111.137(a), (b)(1)-(4), and (c) of this title
(relating to Control Requirements for Surfaces with Coatings Containing Less
than 1.0% Lead); and 

(iv) Section 111.139(a) and (b) of this title (relating to
Exemptions). 

(8) The owner or operator of sites subject to
the provisions of this chapter that are affected by the requirements of Chapter
115, Subchapter C of this title (relating to Volatile Organic Compound Transfer
Operations) shall comply with the following. 

(A) The requirements in the undesignated head Loading and
Unloading of Volatile Organic Compounds in Chapter 115, Subchapter C of this
title for the Houston/Galveston, Beaumont/Port Arthur, Dallas/Fort Worth,
and El Paso ozone nonattainment areas are as follows: 

(i) Section 115.212(a)(4), (5)(D), (8)(C), (9)(A), (9)(C),
and (12) of this title; 

(ii) Section 115.214(a)(3) of this title (relating to Inspection
Requirements); 

(iii) Section 115.215(a) of this title (relating to Approved
Test Methods); and 

(iv) Section 115.216(a)(3)(A)-(C) and (4)(A)-(C) of this title
(relating to Monitoring and Recordkeeping Requirements). 

(B) The requirements of the undesignated head Loading and Unloading
of Volatile Organic Compounds in Chapter 115, Subchapter C of this title
for Gregg, Nueces, and Victoria Counties are as follows: 

(i) Section 115.212(b)(2) and (3)(C) of this title; 

(ii) Section 115.215(b) of this title; and 

(iii) Section 115.216(b)(3)(A) of this title. 

(C) The requirements of the undesignated head Loading and Unloading
of Volatile Organic Compounds in Chapter 115, Subchapter C of this title
for Aransas, Bexar, Calhoun, Matagorda, San Patricio, and Travis Counties
are sec.115.212(c)(2) and (3)(C) of this title. 

(D) The requirements in the undesignated head Filling of Gasoline
Storage Vessels (Stage I) For Motor Vehicle Fuel Dispensing Facilities in
Chapter 115, Subchapter C of this title for the Houston/Galveston, Beaumont/Port
Arthur, Dallas/Fort Worth, and El Paso ozone nonattainment areas are as follows:
(i) Section 115.221 of this title (relating to Emission Specifications);
(ii) Section 115.222 of this title (relating to Control Requirements);
(iii) Section 115.224 of this title (relating to Inspection
Requirements); 

(iv) Section 115.225(1)-(5) of this title (relating to Testing
Requirements); 

(v) Section 115.226 of this title (relating to Recordkeeping
Requirements); and 

(vi) Section 115.227 of this title (relating to Exemptions).
(E) The requirements in the undesignated head Control of Volatile
Organic Compound Leaks From Transport Vessels in Chapter 115, Subchapter
C of this title for the Houston/Galveston, Beaumont/Port Arthur, Dallas/Fort
Worth, and El Paso ozone nonattainment areas are as follows: 

(i) Section 115.234 of this title (relating to Inspection Requirements);
(ii) Section 115.235(1), (2), (3)(A), and (4) of this title
(relating to Approved Test Methods); 

(iii) Section 115.236 of this title (relating to Recordkeeping
Requirements); and 

(iv) Section 115.237 of this title (relating to Exemptions).
(F) The requirements in the undesignated head Control of Vehicle
Refueling Emissions (Stage II) at Motor Vehicle Fuel Dispensing Facilities
in Chapter 115, Subchapter C of this title for the Houston/Galveston, 
Beaumont/Port
Arthur, Dallas/Fort Worth, and El Paso ozone nonattainment areas are as follows:
(i) Section 115.241 of this title (relating to Emission Specifications);
(ii) Section 115.242 of this title (relating to Control Requirements);
(iii) Section 115.244 of this title (relating to Inspection
Requirements); 

(iv) Section 115.245(1), (2), (3), (5), and (6) of this title
(relating to Testing Requirements); 

(v) Section 115.246 of this title (relating to Recordkeeping
Requirements); and 

(vi) Section 115.247 of this title (relating to Exemptions).
(G) The requirements in the undesignated head Control of Reid
Vapor Pressure of Gasoline in Chapter 115, Subchapter C of this title for
the El Paso ozone nonattainment area are as follows: 

(i) Section 115.252 of this title (relating to Control Requirements);
(ii) Section 115.255 of this title (relating to Approved Test
Methods); 

(iii) Section 115.256 of this title (relating to Recordkeeping
Requirements); and 

(iv) Section 115.257 of this title (relating to Exemptions).
(9) For the degassing or cleaning of stationary
and transport vessels located in the Houston/Galveston, Beaumont/Port Arthur,
Dallas/Fort Worth, or El Paso ozone nonattainment areas, the owner or operator
shall comply with the requirements of Chapter 115, Subchapter F of this title
(relating to Miscellaneous Industrial Sources), as follows: 

(A) for the degassing or cleaning of stationary volatile organic
compound storage vessels with a nominal capacity of one million gallons or
more, comply with the following requirements: 

(i) Section 115.541(a)(1) of this title (relating to Emission
Specifications); 

(ii) Section 115.542(a) of this title (relating to Control
Requirements); 

(iii) Section 115.544 of this title (relating to Inspection
Requirements); 

(iv) Section 115.545(1)-(9) of this title (relating to Approved
Test Methods); 

(v) Section 115.546 of this title (relating to Monitoring and
Recordkeeping Requirements); and 

(vi) Section 115.547 of this title (relating to Exemptions);
(B) for the degassing or cleaning of all transport vessels
with a nominal capacity of 8,000 gallons or more, comply with the following
requirements: 

(i) Section 115.541(a)(2) of this title; 

(ii) Section 115.542(a) of this title; 

(iii) Section 115.544 of this title; 

(iv) Section 115.545(1)-(9) of this title; 

(v) Section 115.546 of this title; and 

(vi) Section 115.547 of this title. 

(10) For emission units located in the Houston/Galveston
or Beaumont/Port Arthur ozone nonattainment areas and subject to the provisions
of the undesignated head Commercial, Institutional, and Industrial Sources
in Chapter 117, Subchapter B of this title (relating to Combustion at Existing
Major Sources), the owner or operator shall have submitted a complete initial
control plan as required by sec.117.209 of this title (relating to Initial
Control Plan Procedures). 

(11) For emission units located in the Houston/Galveston
or Beaumont/Port Arthur ozone nonattainment areas and subject to the 
requirements
of the undesignated head Commercial, Institutional, and Industrial Sources
in Chapter 117, Subchapter B of this title, the owner or operator shall comply
with the requirements of the undesignated head Commercial, Institutional,
and Industrial Sources by the compliance date specified in sec.117.520
of this title (relating to Compliance Schedule for Commercial, Institutional,
and Industrial Combustion Sources). 

(12) For covered processes subject to Title 40, Code of
Federal Regulations, Part 68 (40 CFR 68) and specified in 40 CFR, sec.68.10,
the owner or operator shall comply with the requirements of the Accidental
Release Prevention Provisions in 40 CFR 68. The owner or operator shall submit
to the appropriate agency, either a compliance schedule for meeting the 
requirements
of 40 CFR 68 by the date provided in 40 CFR, sec.68.10(a), or as part of
the compliance certification submitted under sec.122.143(4) of this title,
a certification statement that the source is in compliance with all requirements
of 40 CFR 68, including the registration and submission of a risk management
plan. This general provision is enforceable only by the Administrator of
the EPA. 

(13) Owners and operators of a site subject to Title VI
of the FCAA shall meet the following requirements for protection of 
stratospheric
ozone which are enforceable only by the Administrator of the EPA. 

(A) Operation, servicing, maintenance, and repair on refrigeration
and non-motor vehicle air conditioning appliances using ozone-depleting 
refrigerants
on-site shall be conducted in accordance with Title 40, Code of Federal 
Regulations,
Part 82 (40 CFR 82), Subpart F. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
F. 

(B) Servicing, maintenance, and repair of fleet vehicle air
conditioning using ozone-depleting refrigerants shall be conducted in accordance
with 40 CFR 82, Subpart B. Owners or operators shall ensure that repairs
or refrigerant removal are performed only by properly certified technicians
using approved equipment. Records shall be maintained as required by Subpart
B.  

(14) Surface coating operations, other than those
performed on equipment that is located on-site and in-place, which are 
authorized
to operate under this General Operating Permit shall comply with the following
requirements: 

(A) at sites located in the Houston/Galveston, Beaumont/Port
Arthur, Dallas/Fort Worth, or El Paso ozone nonattainment areas, surface
coating operations that are subject to the conditions for exemptions referenced
in sec.115.427(a)(3)(A) of this title (relating to Exemptions) shall maintain
sufficient records to document applicability as required by sec.115.426(a)(4)
of this title (relating to Monitoring and Recordkeeping Requirements); or
(B) at sites located in Gregg, Nueces, or Victoria Counties,
surface coating operations that are subject to the conditions for exemptions
referenced in sec.115.427(b)(1) of this title shall maintain sufficient
records to document applicability as required by sec.115.426(b)(3) of this
title. 

(15) The owner or operator shall keep records as
required in 40 CFR, sec.61.246(i) if claiming the exemption in 40 CFR,
sec.61.110(c)(2), pertaining to National Emission Standard for Equipment
Leaks (Fugitive Emission Sources) of Benzene. 

(16) Upon the granting of this General Operating Permit,
detailed applicability determinations and the underlying basis for those
determinations in the General Operating Permit application submitted to comply
with the requirements of this chapter shall become conditions under which
the owner or operator shall operate. 

(c) Permit tables. 

(1) The following permit table lists the requirements for Storage
Vessels affected by 40 CFR 60, Subpart K. 

Figure 4: 30 TAC sec.122.515(c)(1) 

(2) The following permit table lists the requirements
for Storage Vessels affected by 40 CFR 60, Subpart Ka. 

Figure 5: 30 TAC sec.122.515(c)(2) 

(3) The following permit table lists the requirements
for Storage Vessels affected by 40 CFR 60, Subpart Kb. 

Figure 6: 30 TAC sec.122.515(c)(3) 

(4) The following permit table lists the requirements
for Storage Vessels located in Brazoria, Chambers, Collin, Dallas, Denton,
El Paso, Fort Bend, Galveston, Hardin, Harris, Jefferson, Liberty, Montgomery,
Orange, Tarrant, or Waller Counties which are affected by Chapter 115 of
this title.

Figure 7: 30 TAC sec.122.515(c)(4) 

(5) The following permit table lists the requirements
for Storage Vessels located in Gregg, Nueces, or Victoria Counties which
are affected by Chapter 115 of this title. 

Figure 8: 30 TAC sec.122.515(c)(5) 

(6) The following permit table lists the requirements
for Storage Vessels located in Aransas, Bexar, Calhoun, Matagorda, San Patricio,
or Travis Counties which are affected by Chapter 115 of this title.

Figure 9: 30 TAC sec.122.515(c)(6) 

(7) The following permit table lists the requirements
for Flares affected by 40 CFR 60, Subpart A. 

Figure 10: 30 TAC sec.122.515(c)(7) 

(8) The following permit table lists the requirements
for Flares affected by Chapter 111 of this title. 

Figure 11: 30 TAC sec.122.515(c)(8) 

(9) The following permit table lists the requirements
for Combustion Units affected by Chapter 117 of this title (relating to Control
of Air Pollution From Nitrogen Compounds). 

Figure 12: 30 TAC sec.122.515(c)(9) 

(10) The following permit table lists the requirements
for Non-Marine VOC Loading/Unloading Operations located in Brazoria, Chambers,
Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Hardin, Harris, 
Jefferson,
Liberty, Montgomery, Orange, Tarrant, or Waller Counties which are affected
by Chapter 115 of this title.

Figure 13: 30 TAC sec.122.515(c)(10) 

(11) The following permit table lists the requirements
for Non-Marine VOC Loading/Unloading Operations located in Gregg, Nueces,
or Victoria Counties which are affected by Chapter 115 of this title. 

Figure 14: 30 TAC sec.122.515(c)(11) 

(12) The following permit table lists the requirements
for Non-Marine VOC Loading/Unloading Operations located in Aransas, Bexar,
Calhoun, Matagorda, San Patricio, or Travis Counties which are affected by
Chapter 115 of this title.

Figure 15: 30 TAC sec.122.515(c)(12) 

(13) The following permit table lists the requirements
for VOC Water Separators located in Brazoria, Chambers, Collin, Dallas, Denton,
El Paso, Fort Bend, Galveston, Hardin, Harris, Jefferson, Liberty, Montgomery,
Orange, Tarrant, or Waller Counties which are affected by Chapter 115 of
this title. 

Figure 16: 30 TAC sec.122.515(c)(13) 

(14) The following permit table lists the requirements
for VOC Water Separators located in Gregg, Nueces, or Victoria Counties which
are affected by Chapter 115 of this title. 

Figure 17: 30 TAC sec.122.515(c)(14) 

(15) The following permit table lists the requirements
for VOC Water Separators located in Aransas, Bexar, Calhoun, Matagorda, San
Patricio, or Travis Counties which are affected by Chapter 115 of this title. 
Figure 18: 30 TAC sec.122.515(c)(15) 

(16) The following permit table lists the requirements
for Cold Cleaning Degreasing Operations located in Brazoria, Chambers, Collin,
Dallas, Denton, El Paso, Fort Bend, Galveston, Hardin, Harris, Jefferson,
Liberty, Montgomery, Orange, Tarrant, or Waller Counties which are affected
by Chapter 115 of this title.

Figure 19: 30 TAC sec.122.515(c)(16) 

(17) The following permit table lists the requirements
for Bulk Gasoline Terminals affected by 40 CFR 60, Subpart XX. 

Figure 20: 30 TAC sec.122.515(c)(17) 

(18) The following permit table lists the requirements
for Stationary Vents located in Brazoria, Chambers, Collin, Dallas, Denton,
El Paso, Fort Bend, Galveston, Hardin, Harris, Jefferson, Liberty, Montgomery,
Orange, Tarrant, or Waller Counties which are affected by Chapter 115 of
this title.

Figure 21: 30 TAC sec.122.515(c)(18) 

(19) The following permit table lists the requirements
for Stationary Vents located in Nueces and Victoria Counties which are affected
by Chapter 115 of this title. 

Figure 22: 30 TAC sec.122.515(c)(19) 

(20) The following permit table lists the requirements
for Stationary Vents located in Aransas, Bexar, Calhoun, Matagorda, San 
Patricio,
or Travis Counties which are affected by Chapter 115 of this title.

Figure 23: 30 TAC sec.122.515(c)(20) 

This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.

Issued in Austin, Texas, on September 30, 1996.
TRD-9614216
Kevin McCalla

Director, Legal Counsel

Texas Natural Resource Conservation Commission

Effective date: October 21, 1996

Proposal publication date: June 4, 1996

For further information, please call: (512) 239-1966

CHAPTER 292.River Authorities
The Texas Natural Resource Conservation Commission (commission) adopts
the amendments to sec.sec.292.1, 292.2, 292.11, and 292.13 and repeal
of sec.292.3, concerning river authorities and the commission's supervision
over their actions. 

Amendments to sec.292.2, and sec.292.13 are adopted with changes to
the proposed text as published in the April 5, 1996, issue of the 
Texas Register (21 TexReg 2919). Amendments to sec.292.1, sec.292.11,
and the repeal of sec.292.3 are adopted without changes and will not be
republished. 

These changes are in response to the passage of Senate Bill 626, Acts of
the 74th Legislature, 1995, which repealed and reorganized several 
administrative
provisions in Texas Water Code, Chapters 50-66, as well as other legislative
changes. The amendments update references and citations to current statutes.
No comments were received on the proposed rules. The adopted rules update
definitions and rules to conform to recent changes to the definitions contained
in sec.3.2 of this title. 

The Commission has prepared a Takings Impact Assessment for these rules
pursuant to Texas Government Code Annotated, sec.2007.043. The following
is a summary of that Assessment. The main purpose of the rule is to implement
Senate Bill 626, enacted by the 74th legislature, 1995. The rules will 
substantially
advance this specific purpose by changing the citations from the repealed
Chapter 50, Water Code to the new Chapter 49, Water Code and amending the
rules where necessary to reflect changes in the statutes as more fully described
herein. Promulgation and enforcement of these rules will not affect private
real property. 

SUBCHAPTER A.General Provisions
30 TAC sec.292.1, sec.292.2
The amendments are adopted under Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Commission with the authority to adopt
any sections necessary to carry out its powers and duties under the Texas
Water Code and other laws of the State of Texas, to establish and approve
all general policy of the commission, and to collect statutory fees from
persons submitting various applications to the commission.

The amendments are adopted under the Texas Water Code, sec.sec.5.013,
5.103, 5.105, and 12.081, which provide the Texas Natural Resource Conservation
Commission with the authority to adopt any rules necessary to carry out its
powers and duties under the Texas Water Code and other laws of the State
of Texas, to establish and approve all general policies of the commission,
and to issue rules necessary to supervise districts and authorities. 

sec.292.2. Meaning of Certain Words.
Unless the context requires otherwise, the following terms and phrases
shall mean the following: 

(1) Authority shall be used interchangeably with the term District
to connote any entity created by Article III, Section 52 or Article XVI,
Section 59, of the Texas Constitution and which are subject to these rules.
(2) Board means the governing body of the district.

This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.

Issued in Austin, Texas, on September 30, 1996.
TRD-9614299
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

30 TAC sec.292.3
The repeal is adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614298
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

SUBCHAPTER B.Administrative Policies
30 TAC sec.292.11, sec.292.13
The amendments are adopted under the Texas Water Code, &sec.5.103,
5.105 and 12.081, which provide the commission with the authority to adopt
any rules necessary to carry out its powers and duties under the Texas Water
Code and other laws of the State of Texas, to establish and approve all general
policy of the commission, and to issue rules necessary to supervise districts
and authorities. 

sec.292.13.Minimum Provisions.
The following provisions shall be incorporated into the administrative
policies adopted by the authorities subject to these rules. 

(1) Code of Ethics. The administrative policies shall mandate
compliance with the following standards: 

(A) the Local Government Code, Chapter 171, relating to conflicts
of interests with a business entity in which the official has a substantial
interest. 

(B) Texas Government Code, Chapter 573, relating to nepotism.
(C) for River Authorities, Texas Government Code, Chapter
572, relating to standards of conduct, personal financial disclosure, and
conflict of interest. 

(D) Article III, Section 52, of the Texas Constitution, relating
to the prohibition on granting public money or things of value to any 
individual,
association or corporation. 

(2) Travel Expenditures. The administrative policies
shall provide for reimbursing district officials for necessary and reasonable
travel expenditures incurred while conducting business or performing official
duties or assignments. The board may adopt additional policies which further
define the criteria for necessary and reasonable travel expenditures and
which provide procedures for the reimbursement of expenses. 

(3) Investments. The administrative polices shall provide
for compliance with the following statutes: 

(A) Subchapter A, Chapter 2256, Government Code ( the Public
Funds Investment Act); 

(B) Chapter 2257, Government Code (the Public Funds Collateral
Act); and 

(C) any other appropriate statutes which are applicable to
the investment of the authority's funds. 

(4) Professional Services Policy. The administrative
polices shall provide for compliance with the following standards: 

(A) Texas Government Code, Chapter 2254, Subchapter A (the
Professional Services Procurement Act) which prohibits the selection of 
professional
services based on competitive bids. 

(B) A list shall be maintained of at least three qualified
persons or firms for each area of professional service used by the authority.
The pre-qualified persons or firms shall be sent a request for proposal for
any contract award for a new project which is expected to exceed $25,000.
(5) Industrial Development Bonds and Pollution Control
Bonds. The administrative policies shall reference any industrial development
corporation associated with the authority and shall provide for compliance
with the memorandum issued by the State Auditor on October 7, 1988 relating
to the disclosure of industrial development and pollution control bonds.
(6) Management Policies. The administrative policies shall
provide for the following: 

(A) an independent management audit to be conducted every
five years and submitted to the executive director. As an alternative, an
internal audit office may be established which reports to the board of 
directors.
(B) compliance with the provisions and intent of sec.106,
Contracting With Historically Underutilized Businesses of Texas, Article
V, General Provisions of Texas House Bill 1, 72nd Legislature, First Called
Session (1991) relative to contracting with underutilized businesses and
providing equal employment opportunities.

This agency hereby certifies that the adoption
has been reviewed by legal counsel and found to be a valid exercise of the
agency's legal authority.

Issued in Austin, Texas, on September 30, 1996.
TRD-9614300
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

CHAPTER 293.Water Districts
The Texas Natural Resource Conservation Commission (commission) adopts
the repeal of 30 TAC sec.sec.293.11-293.18, 293.22-293.24, 293.41, 293.60-
293.61,
293.149-293.152, 293.177, 293.301-293.311, 293.331, 293.341 and 293.343;
amendments to sec.sec.293.1, 293.3-293.4, 293.6, 293.21, 293.32-293.34,
293.42-293.44, 293.46-293.48, 293.50, 293.55-293.57, 293.59, 293.62-293.63,
293.68-293.70, 293.83, 293.88, 293.91-293.97, 293.101, 293.111, 293.121,
293.123-293.124, 293.131-293.132, 293.134, 293.141-293.143, 293.145-293.146,
293.148, 293.171-293.173, 293.180, 293.201-293.202, 293.361-293.365; and
new sec.sec.293.11-293.15, sec.sec.293.22-293.25, 293.35, 293.41,
293.60, 293.61, 293.80, 293.102-293.103, and 293.149-293.150, relating to
water districts subject to commission supervision.  

Amendments to sec.sec.293.3, 293.4, 293.21, 293.33, 293.34, 293.42,
293.46, 293.48, 293.62, 293.68-293.70, 293.83, 293.88, 293.91, 293.92, 293.93,
293.94, 293.96, 293.111, 293.131, 293.132, 293.141-143, 293.145-293.146,
293.172-293.173, 293.180, 293.202, 293.361-293.362, and new sec.sec.293.11-
293.15,
293.25, 293.22, 293.23, 293.35, 293.61, 293.80, and 293.102 are adopted with
changes to the proposed text as published in the April 5, 1996, issue of
the Texas Register (21 TexReg 2920). 

The repeals of sec.sec.293.11-293.18, 293.22-293.24, 293.41,293.60-293.61,
293.149-293.152,293.177, 293.301-293.311, 293.331, and 293.341; amendments
to sec.sec.293.1, 293.6, 293.32, 293.44, 293.47, 293.50, 293.55-293.57,
293.59, 293.63, 293.95, 293.97, 293.101, 293.121, 293.123-293.124, 293.134,
293.148, 293.171, 293.201, 293.363-292.365; and new sec.sec.293.24, 293.41,
293.60, 293.103, and 293.149-293.150 are adopted without changes and will
not be republished. 

The repeal of sec.293.343 is adopted without changes as published in
the April 23, 1996, issue of the Texas Register
(21 TexReg 3506) and will not be republished. 

The purpose of the adopted rules is to incorporate new references and new
requirements relating to the administration of water districts and the 
commission's
supervision over their actions as provided by Senate Bill (SB) 626, Acts
of the 74th Legislature, 1995, which repealed and reorganized several 
administrative
provisions in the Texas Water Code, Chapters 50-66 and added Chapters 49
and 59. These amendments also incorporate new procedural requirements for
designating groundwater management areas pursuant to House Bill (HB) 2294,
Acts of the 74th Legislature, 1995, and HB 2209, Acts of the 73rd Legislature,
1993, which codifies the creation and duties of the Harris-Galveston Coastal
Subsidence District into a new Title 5 of the Texas Water Code. Additionally,
these revisions reflect updated citations to other statutory requirements
and cross-references to other chapters of this title, as well as clarifying
certain sections.  

Written testimony on these rules was provided by six commenters. Written
testimony that requested clarification or questioned certain sections was
provided by the Greater Houston Builders Association and other interested
individuals. Written testimony that requested waivers or exemptions of certain
provisions was provided by the Cypress Hill Municipal Utility District, the
Lamar County Water Supply District, and the Texas Rural Water Association.
The following paragraphs summarize the comments received. 

The Greater Houston Builders Association and an individual suggested that
the certificate received from the county clerk's office as required by 
sec.293.14(b),
relating to District Actions Following Creation, be required to show only
the date and not the time of the district confirmation election and the time
that the information form is filed. The commission concurs with this suggestion
and has deleted the requirement that the certificate show the time of the
election and informational filing. 

The Greater Houston Builders Association and an individual requested that
sec.293.35(c), relating to Reinstatement of a Board Member, be modified
to insert "to the attorney for the district" in the second sentence so that
a copy of the report prepared by the executive director is also mailed to
the district's attorney. The commission agrees that a copy of the report
should be sent to the district's attorney if that information is available.
The commission also believes that the report should be sent to the district's
official address to assure proper notification. Therefore, the second sentence
has been modified to read as follows: "A copy of the report will be mailed
to the removed board member, the directors of the district, the district's
official address and any other interested parties, including the district's
attorney, if known."  

The Lamar County Water Supply District and the Texas Rural Water Association
requested that sec.293.41(a), relating to Approval of Projects and Issuance
of Bonds, be changed to exempt from TNRCC bond approval districts that can
achieve and consistently maintain an investment grade bond rating, levy no
taxes, and involve no developer interest. The exemptions in the proposed
rules are taken directly from Texas Water Code, sec.49.181, which governs
the commission's approval of district bonds. The statute does not provide
for any other exemptions from the commission's bond approval authority. 
Therefore,
no changes have been made. 

The Greater Houston Builders Association objected to a possible interpretation
of "availability of plans", as referenced in sec.239.46(5), relating to
Construction Prior to Commission Approval. The rule simply refers to the
statutory requirements, and the proposed amendment was only to reference
the effective date of the rule. Therefore, no changes have been made in response
to the comment. 

The Greater Houston Builders Association expressed concern about the 100%
reimbursable status under sec.293.47(d)(8), relating to Thirty Percent
of District Construction Costs to be Paid by Developer, of drainage impact
fees required by Harris County Flood Control District. No changes were 
suggested.
The intent of the rule is to make clear that costs associated with construction
of drainage facilities serving or programmed to serve less than 2,000 acres
do not qualify for an exemption to the 30% rule even though their construction
may be required by another entity, including the Harris County Flood Control
District. 

The Greater Houston Builders Association and an individual questioned why
sec.293.48, relating to Street and Water, Wastewater and Drainage Utility
Construction by Developer, requires a letter of credit for the construction
of utilities before a district advertises bonds for sale when sec.293.59(k)(6),
relating to Economic Feasibility of Project, requires that such utilities
be 95% complete. They asked that this requirement be clarified. Although
utilities are required to be completed in most instances, districts with
a low combined no-growth tax rate or that have an acceptable rating on their
bonds are exempt from sec.293.59(k)(6). In such cases, financial guarantees
are required for any developer's share of incomplete utilities. For clarity,
"Except as otherwise provided," has been added to the first sentence in 
sec.293.48.
The Greater Houston Builders Association and an individual asked that 
sec.293.63(a)(4),
relating to Contract Documents for Water District Projects, be revised to
provide that a district may require a bid bond or a certified/cashier's check
at the district's sole discretion, and not the contractor's choice. The proposed
language in the rule follows the statutory language in Texas Water Code,
sec.49.271. Districts should consult with their own legal counsel if they
have questions about the interpretation of this statutory provision. 

The Cypress Hill Municipal Utility District and one individual requested
that sec.293.88, relating to Petition for Authorization to Proceed in Federal
Bankruptcy, be amended by including a new subsection waiving the requirement
for the developer to pay 30% of the construction cost (as provided in 
sec.293.47,
relating to Thirty Percent of District Construction Costs to be Paid by 
Developer)
in districts which have secured permission of the creditors and the bankruptcy
court for 100% financing under the terms of the Plan of Arrangement approved
by a federal bankruptcy court. The commission has not made any changes in
response to this comment. The intent of the rule is to help reduce the bonded
indebtedness of a district, assure that the developer has more ownership
and thus financial interest in the construction projects. While waiving the
rule might encourage development in certain formerly bankrupt districts,
it could have negative consequences on other developments. Specifically,
this could give an unfair competitive advantage to such developers over other
developers in the area. Also, this type of regulation tends to reward poor
development or development in areas of low demand and hurts the developers
who may have been more prudent or those that continued to support their 
districts
during times of economic stagnation or decline. In addition, sec.293.47(j)
already allows a district to request a waiver of any requirement in sec.293.47
based on the particular facts at issue. 

The Greater Houston Builders Association asked that sec.293.111, relating
to Utility Service Lines and Connection, be modified to change the references
from "utility" to "water and wastewater" to eliminate confusion over the
term "utility". The commission agrees with this suggestion and has made the
change.  

On August 28, 1996 the commission adopted the rules as proposed with the
instructions to modify the ruse of the words file and submit to make them
consistent with other agency rules. These changes are reflected herein. 
The Commission has prepared a Takings Impact Assessment for these rules
pursuant to Tex. Government Code, Ann. sec.2007.043. The following is a
summary of that Assessment. The main purpose of the rules is to implement
Senate Bill 626, enacted by the 74th legislature, 1995. The rules will 
substantially
advance this specific purpose by changing the cites from the repealed Chapter
50, Water Code to the new Chapter 49, Water Code and amending the rules where
necessary to reflect changes in the statutes as more fully described herein.
Promulgation and enforcement of these rules will not affect private real
property.  

General Provisions
30 TAC sec.293.1, 293.3, 293.4, 293.6
The amendments are adopted under sec.sec.5.103, 5.105,
and 5.235, the Texas Water Code, which provide the Texas Natural Resource
Conservation Commission (commission) with the authority to adopt any sections
necessary to carry out its powers and duties under the Texas Water Code and
other laws of the State of Texas, to establish and approve all general policy
of the commission, and to collect statutory fees from persons submitting
various applications to the commission. 

sec.293.3. Continuing Right of Supervision of Districts
and Authorities Created Under Article III, Section 52 and Article XVI, Section
59 of the Texas Constitution.
(a) The powers and duties of all districts and authorities
created under the Texas Constitution, Article III, sec.52, and Article
XVI, sec.59, are subject to the continuing right of supervision of the
State of Texas, by and through the commission or its successor, and this
supervision may include but is not limited to the authority to: 

(1) inquire into the competence, fitness, and reputation of
the officers and directors of any district or authority; 

(2)-(3) (No change.) 

(4) institute investigations and hearings; 

(5) issue rules necessary to supervise the districts and
authorities, except that such rules shall not apply to water quality ordinances
adopted by any river authority which meet or exceed minimum requirements
established by the commission; and 

(6) the right of supervision granted herein shall not
apply to matters relating to electric utility operations. 

(b) the executive director shall prepare and submit to the
governor, lieutenant governor, and speaker of the house a report of any findings
made under this section.

sec.293.4. Public Records.
(a) Audits on file with a district and all other records and
information as set forth in the Texas Water Code, sec.49.194, shall be
maintained in the district office and shall be available to the public during
normal business hours as provided in Texas Government Code, Chapter 552.
(b) All records and information required by law to be filed
with the agency shall be available for public inspection during the office
hours of the agency.

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614277
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Creation of Water Districts
30 TAC sec.sec.293.11-293.18
The repeals are adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614278
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

30 TAC sec.sec.293.11-293.15
The new sections are adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
(commission) with the authority to adopt any sections necessary to carry
out its powers and duties under the Texas Water Code and other laws of the
State of Texas, to establish and approve all general policy of the commission,
and to collect statutory fees from persons submitting various applications
to the commission. 

sec.293.11. Information Required to Accompany Applications
for Creation of Districts.
(a) Creation applications for all types of districts shall
contain the following: 

(1) $700 non refundable application fee; 

(2) if a proposed district's purpose is to supply fresh
water for domestic or commercial use or to provide wastewater services, 
roadways,
or drainage, a certified copy of the action of the governing body of any
municipality in whose extraterritorial jurisdiction the proposed district
is located, consenting to the creation of the proposed district, pursuant
to Local Government Code, sec.42.042. If the governing body of any such
municipality fails or refuses to grant consent, the petitioners must show
that the provisions of Local Government Code, sec.42.042 have been followed.
(3) if city consent was obtained pursuant to paragraph
(2) of this subsection, provide the following: 

(A) evidence that the application conforms substantially to
the city consent; provided, however, that nothing herein shall prevent the
commission from creating a district with less land than included in the city
consent; 

(B) evidence that the city consent does not place any conditions
or restrictions on a district other than those permitted by Texas Water Code,
sec.54.016(e); 

(4) a statement by the appropriate secretary or clerk
that a copy of the petition for creation of the proposed district was received
by any city in whose corporate limits any part of the proposed district is
located; 

(5) evidence of submitting creation petition and report
to appropriate agency regional office; 

(6) if substantial development is proposed, a market study
and a developer's financial statement; 

(7) if the petitioner is a corporation, trust, partnership,
or joint venture, a certificate of corporate authorization to sign the petition,
a certificate of the trustee's authorization to sign the petition, a copy
of the partnership agreement or a copy of the joint venture agreement as
appropriate to evidence that the person signing the petition is authorized
to sign the petition on behalf of the corporation, trust, partnership, or
joint venture;  

(8) a vicinity map; 

(9) unless waived by the executive director, for districts
where substantial development is proposed, a certification by the petitioning
landowners that those lienholders who signed the petition or a separate document
consenting to the petition, or who were notified by certified mail, are the
only persons holding liens on the land described in the petition; 

(10) other related information as required by the executive
director. 

(b) Creation applications for Chapter 36, Texas Water Code,
Groundwater Conservation Districts shall contain the items listed in subsection
(a) of this section and the following items: 

(1) a petition containing the matters required by Texas Water
Code, sec.36.013, signed by the majority of the landowners in the proposed
district, or if there are more than 50 landowners, at least 50 of those 
landowners.
The petition shall include the following: 

(A) the name of the proposed district; 

(B) the area and boundaries of the proposed district, including
a map generally outlining the boundaries of the proposed district; 

(C) the purpose or purposes of the proposed district; 

(D) a statement of the general nature of any projects proposed
to be undertaken by the district, the necessity and feasibility of the work,
and the estimated cost of those projects according to the petitioners if
the projects are to be funded by the issuance of bonds or notes; and 

(E) any additional terms or conditions that limit the powers
of the proposed district from those authorized in Chapter 36, Texas Water
Code. 

(2) evidence that the boundaries are coterminous
with or inside the boundaries of a delineated groundwater management area,
critical area, or underground water reservoir or subdivision thereof. A 
groundwater
conservation district may include all or part of one or more counties, cities,
districts, or other political subdivision and may consist of separate bodies
of land within a groundwater management area, critical area, or underground
water reservoir or subdivision thereof separated by land not included in
the proposed district. Evidence shall show: 

(A) a rule adopted by the commission designating a groundwater
management area as provided in the Texas Water Code, sec.35.004, and 
sec.sec.293.21-293.25
of this title (relating to Designation of Groundwater Management Areas),
designating a critical area as provided under the Texas Water Code, 
sec.sec.35.007-35.012,
or an order designating delineation of an underground water reservoir or
subdivision thereof; or 

(B) if part of the proposed district is not included within
either a delineated groundwater management area, critical area, or underground
water reservoir or a subdivision thereof, the petition may also contain a
request (meeting the requirements of the Texas Water Code, sec.35.005 and
sec.sec.293.21-293.25 of this title) to create or alter the boundaries
of a management area. If such a request is made, it may be acted upon separately
by the commission from the petition for the creation of the proposed district;
(3) a map showing the proposed district's boundaries,
metes and bounds, area, physical culture, and computation sheet for survey
closure; 

(4) a vicinity map (22-24 inches by 36 inches or in a
digital data electronic format) showing as appropriate the location of 
municipalities,
highways, roads, and other improvements, together with the areal extent of
groundwater aquifers, reservoirs, or subdivisions thereof, and showing the
location of known recharge (i.e., outcrops of aquifer units, karst features,
etc.) or discharge (i.e., known seeps, springs, etc.) features, and any other
information pertinent to the creation of the proposed district; 

(5) a geologic/hydrologic report including as appropriate:
(A) the purpose or purposes of the proposed district and its
management planning objectives/goals; 

(B) a description of the existing area, conditions, topography,
economic endeavors which rely heavily upon groundwater, and any proposed
improvements;  

(C) a description of the groundwater resources, including
the characteristics (i.e., recharge/discharge features, depth of usable 
groundwater,
etc.) of individual aquifers within the proposed district; 

(D) complete justification for the creation of the proposed
district supported by evidence that the district is feasible, practicable,
necessary, and will benefit all of the land to be included in the district;
(E) if the proposed district is located in a designated critical
area, a description of how the proposed projects will address issues identified
within the critical area; 

(F) the existing and projected land use in the proposed district;
(G) the existing and projected groundwater quality, quantity,
availability, and usage within the proposed district, including any foreseeable
quality, quantity, availability, and usage issues as identified by the 
petitioners;
(H) the existing and projected population; 

(I) an evaluation of the effect the proposed district and its
programs will have within the district on the following: 

(i) land elevation; 

(ii) subsidence; 

(iii) groundwater levels; 

(iv) groundwater conservation and availability; 

(v) groundwater quality; 

(vi) monitoring of ambient groundwater conditions; 

(vii) groundwater educational initiatives; 

(J) financial information including the following: 

(i) the projected maintenance tax rate, under Texas Water Code,
sec.36.020, which should not exceed 50 cents on each $100 of assessed valuation;
(ii) the proposed budget of revenues and expenses for the district;
(iii) an evaluation of the effect the district and its programs
will have on the total tax assessments on all land within the district, 
including
a discussion of current and projected tax rates; 

(iv) tentative itemized cost estimates of the proposed projects
and itemized cost summary for anticipated bond issue requirements; 

(K) if water supply utility services are proposed: 

(i) an evaluation of the availability of comparable service
from other entities, including, but not limited to, water districts, water
supply corporations, municipalities, and regional authorities; 

(ii) complete justification, supported by evidence, for the
necessity and feasibility of the proposed district to provide water supply
services; 

(iii) the current and projected water rates in the proposed
district; 

(iv) tentative itemized cost estimates of the proposed capital
improvements and itemized cost summary for anticipated bond issue requirements;
and 

(v) any other related technical information as required by
the executive director; 

(6) a certificate by the county tax assessor(s)
indicating the owners and tax valuation of land within the proposed district
as reflected on the county tax rolls as of the date of the petition. If the
tax rolls do not show the petitioners to be the majority of the landowners
within the proposed district, then the petitioners shall submit to the executive
director a certified copy of the deed(s) tracing title from the person(s)
listed on the county tax rolls as owners of the land to the petitioners and
any additional information required by the executive director necessary to
show accurately the ownership of the land to be included in the proposed
district;  

(7) affidavits by those persons desiring appointment by
the commission as temporary directors, showing compliance with applicable
statutory requirements of qualifications and eligibility for temporary 
directors,
and in accordance with Texas Water Code, sec.sec.36.051(b) , 36.058,
and 36.059(b) for appointment of directors; and 

(8) any other data as the executive director may require.
(c) Creation applications for Chapter 51, Texas Water Code,
Water Control and Improvement Districts within 2 or more counties shall contain
items listed in subsection (a) of this section and the following: 

(1) a petition as required by Texas Water Code, sec.51.013,
requesting creation signed by majority of persons holding title to land 
representing
a total value of more than 50 percent of value of all land in proposed district
as indicated by county tax rolls, or if there are more than 50 persons holding
title to land in the proposed district, the petition can be signed by 50
of them. The petition shall include the following: 

(A) name of district; 

(B) area and boundaries of district; 

(C) constitutional authority; 

(D) purpose(s) of district; 

(E) statement of the general nature of work and necessity
and feasibility of project with reasonable detail; 

(F) statement of estimated cost of project. 

(2) evidence that the petition was filed with the
office of the county clerk of the county(ies) in which the district or portions
of the district are located; 

(3) a map showing the district boundaries, metes and bounds,
area, physical culture, and computation sheet for survey closure; 

(4) a preliminary plan (22-24 inches by 36 inches or digital
data in electronic format) showing the location of existing facilities including
highways, roads, and other improvements, together with the location of proposed
utility mains and sizing, general drainage patterns, principal drainage ditches
and structures, utility plant sites, recreational areas, commercial and school
sites, areas within the 100-year flood plain and 100-year floodway, and any
other information pertinent to the project including an inventory of any
existing water, wastewater or drainage facilities; 

(5) a preliminary engineering report including the following
as applicable: 

(A) a description of existing area, conditions, topography
and proposed improvements; 

(B) land use plan; 

(C) 100-year flood computations or source of information;
(D) existing and projected populations; 

(E) tentative itemized cost estimates of the proposed capital
improvements and itemized cost summary for anticipated bond issue requirement;
(F) projected tax rate and water and wastewater rates; 

(G) an investigation and evaluation of the availability of
comparable service from other systems, including but not limited to water
districts, municipalities, and regional authorities; 

(H) an evaluation of the effect the district and its systems
and subsequent development within the district will have on the following:
(i) land elevation; 

(ii) subsidence; 

(iii) groundwater level within the region; 

(iv) recharge capability of a groundwater source; 

(v) natural run-off rates and drainage; 

(vi) water quality; 

(I) a table summarizing overlapping taxing entities and the
most recent tax rates by those entities; and 

(J) complete justification for creation of the district supported
by evidence that the project is feasible, practicable, necessary, will benefit
all of the land and residents to be included in the district and will further
the public welfare. 

(6) a certificate by the county tax assessor indicating
the owners and tax valuation of land within the proposed district as reflected
on the county tax rolls as of the date of the petition or any amended petition.
If the tax rolls do not show the petitioner(s) to be the owners of the majority
of value of the land within the proposed district, then the petitioner(s)
shall submit to the executive director a certified copy of the deed(s) tracing
title from the person(s) listed on the county tax rolls as owners of the
land to the petitioner(s) and any additional information required by the
executive director necessary to show accurately the ownership of the land
to be included in the district; 

(7) affidavits by those persons desiring appointment by
the commission as temporary or initial directors, showing compliance with
applicable statutory requirements of qualifications and eligibility for 
temporary
or initial directors, in accordance with Texas Water Code, sec.sec.51.072
and 49.052; and 

(8) other information as required by the executive director.
(d) Creation applications for Chapter 54, Texas Water Code,
Municipal Utility Districts, shall contain items listed in subsection (a)
of this section and the following; 

(1) a petition containing the matters required by Texas Water
Code, sec.sec.54.014 and 54.015 signed by persons holding title to land
representing a total value of more than 50 percent of value of all land in
proposed district as indicated by county tax rolls, if there are more than
50 persons holding title to land in the proposed district, the petition can
be signed by 50 of them. The petition shall include the following: 

(A) name of district; 

(B) area and boundaries of district described by metes and
bounds or lot and block number, if there is a recorded map or plat and survey
of the area; 

(C) necessity for the work; 

(D) statement of the general nature of work proposed; 

(E) statement of estimated cost of project. 

(2) evidence that the petition was filed with the
office of the county clerk of the county(ies) in which the district or portions
of the district are located; 

(3) a map showing the district boundaries in metes and
bounds, area, physical culture, and computation sheet for survey closure;
(4) a preliminary plan (22-24 inches by 36 inches or digital
data in electronic format) showing the location of existing facilities including
highways, roads, and other improvements, together with the location of proposed
utility mains and sizing, general drainage patterns, principal drainage ditches
and structures, utility plant sites, recreational areas, commercial and school
sites, areas within the 100-year flood plain and 100-year floodway, and any
other information pertinent to the project including an inventory of any
existing water, wastewater or drainage facilities; 

(5) a preliminary engineering report including as appropriate:
(A) a description of existing area, conditions, topography
and proposed improvements; 

(B) land use plan; 

(C) 100-year flood computations or source of information;
(D) existing and projected populations; 

(E) tentative itemized cost estimates of the proposed capital
improvements and itemized cost summary for anticipated bond issue requirement;
(F) projected tax rate and water and wastewater rates; 

(G) an investigation and evaluation of the availability of
comparable service from other systems, including but not limited to water
districts, municipalities, and regional authorities; 

(H) an evaluation of the effect the district and its systems
and subsequent development within the district will have on the following:
(i) land elevation; 

(ii) subsidence; 

(iii) groundwater level within the region; 

(iv) recharge capability of a groundwater source; 

(v) natural run-off rates and drainage; 

(vi) water quality; 

(I) a table summarizing overlapping taxing entities and the
most recent tax rates by those entities; and 

(J) complete justification for creation of the district supported
by evidence that the project is feasible, practicable, necessary, and will
benefit all of the land to be included in the district; 

(6) a certificate by the county tax assessor indicating
the owners and tax valuation of land within the proposed district as reflected
on the county tax rolls as of the date of the petition. If the tax rolls
do not show the petitioner(s) to be the owners of the majority of value of
the land within the proposed district, then the petitioner(s) shall submit
to the executive director a certified copy of the deed(s) tracing title from
the person(s) listed on the county tax rolls as owners of the land to the
petitioner(s) and any additional information required by the executive director
necessary to show accurately the ownership of the land to be included in
the district; 

(7) a certified copy of the action of the governing body
of any municipality in whose corporate limits or extraterritorial jurisdiction
the proposed district is located, consenting to the creation of the proposed
district pursuant to Texas Water Code, sec.54.016. For districts to be
located in the extraterritorial jurisdiction of any municipality, if the
governing body of any such municipality fails or refuses to grant consent,
the petitioners must show that provisions of Texas Water Code, sec.54.016
have been followed;  

(8) if city consent was obtained pursuant to paragraph
(7) of this subsection, then provide the following: 

(A) evidence that the application conforms substantially to
the city consent; provided, however, that nothing herein shall prevent the
commission from creating a district with less land than included in the city
consent; 

(B) evidence that the city consent does not place any conditions
or restrictions on a district other than those permitted by Texas Water Code,
sec.54.016(e); 

(C) evidence that the city consent provides for the notice
to buyers of land required by Texas Water Code, sec.49.452(d) - (n) and
(p), and sec.54.016(h)(4)(A), and complies with Texas Water Code, 
sec.54.016(h)(4)(B)
by including in the required filings with the appropriate county clerk or
clerks the information required by Texas Water Code, sec.54.016(h)(4)(A)
and the provisions of Texas Water Code, sec.sec.49.455(c)-(j); 

(9) the petitioners for districts proposed to be
created within the corporate boundaries of a municipality should show that
the city will rebate to the district an equitable portion of city taxes to
be derived from the residents of the area proposed to be included in the
district if such taxes are used by the city to finance elsewhere in the city
services of the type the district proposes to provide. If like services are
not to be provided, then an agreement regarding a rebate of city taxes is
not necessary. Nothing in this subsection is intended to restrict the 
contracting
authorization provided in the Local Government Code, sec.402.014; 

(10) affidavits by those persons desiring appointment
by the commission as temporary directors, showing compliance with applicable
statutory requirements of qualifications and eligibility for temporary 
directors,
in accordance with Texas Water Code, sec.sec.54.102 and 49.052; and 
(11) other data and information as the executive director
may require. 

(e) Creation applications for Chapter 55, Texas Water Code,
Water Improvement Districts within 2 or more counties shall contain items
listed in subsection (a) of this section and the following: 

(1) a petition containing the matters required by Texas Water
Code, sec.55.040 signed by persons holding title to more than 50 percent
of all land in proposed district as indicated by county tax rolls, or by
50 qualified property taxpaying electors. The petition shall include the
following:  

(A) name of district; 

(B) area and boundaries of district; 

(2) a map showing the district boundaries in metes
and bounds, area, physical culture, and computation sheet for survey closure;
(3) a preliminary plan (22-24 inches by 36 inches or digital
data in electronic format) showing the location of existing facilities including
highways, roads, and other improvements, together with the location of proposed
utility mains and sizing, general drainage patterns, principal drainage ditches
and structures, utility plant sites, recreational areas, commercial and school
sites, areas within the 100-year flood plain and 100-year floodway, and any
other information pertinent to the project including an inventory of any
existing water, wastewater or drainage facilities; 

(4) a preliminary engineering report including as appropriate:
(A) a description of existing area, conditions, topography
and proposed improvements; 

(B) land use plan; 

(C) 100-year flood computations or source of information;
(D) existing and projected populations; 

(E) tentative itemized cost estimates of the proposed capital
improvements and itemized cost summary for anticipated bond issue requirement;
(F) projected tax rate and water and wastewater rates; 

(G) an investigation and evaluation of the availability of
comparable service from other systems, including but not limited to water
districts, municipalities, and regional authorities; 

(H) an evaluation of the effect the district and its systems
and subsequent development within the district will have on the following:
(i) land elevation; 

(ii) subsidence; 

(iii) groundwater level within the region; 

(iv) recharge capability of a groundwater source; 

(v) natural run-off rates and drainage; 

(vi) water quality; 

(I) a table summarizing overlapping taxing entities and the
most recent tax rates by those entities; and 

(J) complete justification for creation of the district supported
by evidence that the project is practicable, would be a public utility, and
would serve a beneficial purpose; 

(5) a certificate by the county tax assessor indicating
the owners and tax valuation of land within the proposed district as reflected
on the county tax rolls as of the date of the petition. If the tax rolls
do not show the petitioner(s) to be the owners of the majority of the land
within the proposed district, then the petitioner(s) shall submit to the
executive director a certified copy of the deed(s) tracing title from the
person(s) listed on the county tax rolls as owners of the land to the 
petitioner(s)
and any additional information required by the executive director necessary
to show accurately the ownership of the land to be included in the district;
and 

(6) other data and information as the executive director
may require. 

(f) Creation applications for Chapter 58, Texas Water Code,
Irrigation Districts within 2 or more counties, shall contain items listed
in subsection (a) of this section and the following: 

(1) a petition containing the matters required by the Texas
Water Code, sec.58.013 and sec.58.014 signed by persons holding title
to land representing a total value of more than 50% of value of all land
in proposed district as indicated by county tax rolls, or if there are more
than 50 persons holding title to land in the proposed district, the petition
can be signed by 50 of them. The petition shall include the following: 
(A) name of district; 

(B) area and boundaries; 

(C) provision of the Texas Constitution under which district
will be organized; 

(D) purpose(s) of district; 

(E) statement of the general nature of the work to be done
and the necessity, feasibility, and utility of the project, with reasonable
detail; and 

(F) statement of the estimated costs of the project. 

(2) evidence that the petition was filed with the
office of the county clerk of the county(ies) in which the district or portions
of the district are located; 

(3) a map showing the district boundaries in metes and
bounds, area, physical culture, and computation sheet for survey closure;
(4) a preliminary plan (22-24 inches by 36 inches or digital
data in electronic format) showing as applicable the location of existing
facilities including highways, roads, and other improvements, together with
the location of proposed irrigation facilities, general drainage patterns,
principal drainage ditches and structures, sites, areas within the 100-year
flood plain and 100-year floodway, and any other information pertinent to
the project; 

(5) a preliminary engineering report including the following
as applicable: 

(A) a description of existing area, conditions, topography
and proposed improvements; 

(B) land use plan, including a table showing irrigable and
non-irrigable acreage; 

(C) copies of any agreements, meeting minutes, contracts,
or permits executed or in draft form with other entities including but not
limited to federal, state or local entities or governments or persons; 
(D) tentative itemized cost estimates of the proposed capital
improvements and itemized cost summary for anticipated bond issue requirement;
(E) proposed budget including projected tax rate and/or fee
schedule and rates; 

(F) an investigation and evaluation of the availability of
comparable service from other systems, including but not limited to water
districts, municipalities, and regional authorities; 

(G) an evaluation of the effect the district and its systems
will have on the following: 

(i) land elevation; 

(ii) subsidence; 

(iii) groundwater level within the region; 

(iv) recharge capability of a groundwater source; 

(v) natural run-off rates and drainage; 

(vi) water quality; 

(H) a table summarizing overlapping taxing entities and the
most recent tax rates by those entities; and 

(I) complete justification for creation of the district supported
by evidence that the project is feasible, practicable, necessary, and will
benefit all of the land and residents to be included in the district and
will further the public welfare; 

(6) a certificate by the county tax assessor indicating
the owners and tax valuation of land within the proposed district as reflected
on the county tax rolls as of the date of the petition or any amended petition.
If the tax rolls do not show the petitioner(s) to be the owners of the majority
of value of the land within the proposed district, then the petitioner(s)
shall submit to the executive director a certified copy of the deed(s) tracing
title from the person(s) listed on the county tax rolls as owners of the
land to the petitioner(s) and any additional information required by the
executive director necessary to show accurately the ownership of the land
to be included in the district; 

(7) affidavits by those persons desiring appointment by
the commission as temporary or initial directors, showing compliance with
applicable statutory requirements of qualifications and eligibility for 
temporary
or initial directors, in accordance with Texas Water Code, sec.58.072;
and  

(8) other data as the executive director may require.
(g) Creation applications for Chapter 59, Texas Water Code,
Regional Districts, shall contain items listed in subsection (a) of this
section and the following: 

(1) a petition, as required by Texas Water Code, sec.59.003,
signed by the owner or owners of 2,000 contiguous acres or more; or by the
county commissioners court of one, or more than one, county; or by any city
whose boundaries or ETJ the proposed district lies within; or by 20% of the
municipal districts to be included in the district. The petition shall contain:
(A) a description of the boundaries by metes and bounds or
lot and block number, if there is a recorded map or plat and survey of the
area; 

(B) a statement of the general work, and necessity of the
work; 

(C) estimated costs of the work; 

(D) name of the petitioner(s); 

(E) name of the proposed district; 

(F) if submitted by at least 20% of the municipal districts
to be included in the regional district, such petition shall also include:
(i) a description of the territory to be included in the proposed
district; and 

(ii) endorsing resolutions from all municipal districts to
be included. 

(2) evidence that a copy of the petition was
filed with city clerk in each city where proposed district's boundaries cover
in whole or part; 

(3) if land in the corporate limits or ETJ of a city is
proposed, documentation of city consent or documentation of having followed
the process outlined in Texas Water Code, sec.59.006; 

(4) a preliminary engineering report including as appropriate:
(A) a description of existing area, conditions, topography
and proposed improvements; 

(B) land use plan; 

(C) 100-year flood computations or source of information;
(D) existing and projected populations; 

(E) tentative itemized cost estimates of the proposed capital
improvements and itemized cost summary for anticipated bond issue requirement;
(F) projected tax rate and water and wastewater rates; 

(G) an investigation and evaluation of the availability of
comparable service from other systems, including but not limited to water
districts, municipalities, and regional authorities; 

(5) affidavits by those persons desiring appointment
by the commission as temporary or initial directors, showing compliance with
applicable statutory requirements of qualifications and eligibility for 
temporary
or initial directors, as required by Texas Water Code, sec.sec.59.021
and 49.052; and 

(6) other information as the executive director may require.
(h) Creation applications for Chapter 65, Texas Water Code,
Special Utility Districts, shall contain items listed in subsection (a) of
this section and the following: 

(1) a certified copy of the resolution requesting creation,
as required by Texas Water Code, sec.sec.65.014 and 65.015, signed by
the president and secretary of the board of directors of the water supply
corporation, and stating that the water supply corporation, acting through
its board of directors, has found that it is necessary and desirable for
the water supply corporation to be converted into a district. The resolution
shall include the following: 

(A) a description of the boundaries of the proposed district
by metes and bounds or by lot and block number, if there is a recorded map
or plat and survey of the area, or by any other commonly recognized means
in a certificate attached to the resolution executed by a registered 
professional
engineer; 

(B) a statement regarding the general nature of the services
presently performed and proposed to be provided, and the necessity for the
services; 

(C) name of the district; 

(D) the names of not less than 5 and not more than 11 qualified
persons to serve as the initial board. 

(E) if the proposed district also seeks approval of an impact
fee, the resolution should also include a request for approval of an impact
fee and state the amount of the requested fee. 

(2) the legal description accompanying the resolution
requesting conversion of a water supply corporation, as defined in the Texas
Water Code, sec.65.001(10), to a special utility district shall conform
to the legal description of the service area of the water supply corporation
as such service area appears in the certificate of public convenience and
necessity issued by the commission or by the Public Utility Commission of
Texas to the water supply corporation. Any area of the water supply corporation
that overlaps another entity's certificate of convenience and necessity must
be excluded unless the other entity consents in writing to the inclusion
of its dually certified area in the district; 

(3) a plat showing boundaries of proposed district as
described in the petition; 

(4) a preliminary plan (22-24 inches by 36 inches or digital
data in electronic format) showing the location of existing facilities including
highways, roads, and other improvements, together with the location of proposed
utility mains and sizing, general drainage patterns, principal drainage ditches
and structures, utility plant sites, recreational areas, commercial and school
sites, areas within the 100-year flood plain and 100-year floodway, and any
other information pertinent to the project including an inventory of any
existing water or wastewater facilities; 

(5) a preliminary engineering report including the following
information unless previously provided to the commission: 

(A) a description of existing area, conditions, topography
and any proposed improvements; 

(B) existing and projected populations; 

(C) for proposed system expansion: 

(i) tentative itemized cost estimates of any proposed capital
improvements and itemized cost summary for any anticipated bond issue 
requirement;
(ii) an investigation and evaluation of the availability of
comparable service from other systems, including but not limited to water
districts, municipalities, and regional authorities; 

(D) water and wastewater rates; 

(E) projected water and wastewater rates; 

(F) an evaluation of the effect the district and its system
and subsequent development within the district will have on the following:
(i) land elevation; 

(ii) subsidence; 

(iii) groundwater level within the region; 

(iv) recharge capability of a groundwater source; 

(v) natural run-off rates and drainage; 

(vi) water quality; and 

(G) complete justification for creation of the district supported
by evidence that the project is feasible, practicable, necessary, and will
benefit all of the land to be included in the district; 

(6) a certified copy of a certificate of convenience
and necessity issued by the commission or its predecessor agency to the water
supply corporation applying for conversion to a special utility district;
(7) a certified copy of the most recent financial report
prepared by the water supply corporation; 

(8) if requesting approval of an existing capital recovery
fee or impact fee, supporting calculations and required documentation regarding
such fee; 

(9) certified copy of resolution and an order canvassing
election results, adopted by the water supply corporation, which shows an
affirmative vote of its membership to: 

(A) authorize conversion to a special utility district operating
pursuant to Texas Water Code, Chapter 65; 

(B) approve the dissolution of the water supply corporation
at such time as creation of the special utility district is approved by the
commission; 

(C) approve the conveyance of all the assets and debts of
the water supply corporation to the special utility district upon dissolution;
and 

(10) affidavits by those persons named in the resolution
for appointment by the commission as initial directors, showing compliance
with applicable statutory requirements of qualifications and eligibility
for temporary or initial directors, in accordance with Texas Water Code,
sec.65.102 and sec.49.052 where applicable; 

(11) affidavits indicating that the transfer of the assets
and the certificate of convenience and necessity has been properly noticed
to the executive director and customers in accordance with sec.291.110
of this title (relating to Report of Sale, Merger or Consolidation) and 
sec.291.111
of this title (relating to Transfer of Certificates of Convenience and 
Necessity);
and 

(12) other information as the executive director requires.
(i) Creation applications for Chapter 66, Texas Water Code,
Stormwater Control Districts, shall contain items listed in subsection (a)
or this section and the following: 

(1) a petition as required by Texas Water Code, sec.sec.66.014,
66.015 and 66.016 requesting creation of a stormwater control district signed
by at least 50 persons who reside within the boundaries of the proposed district
or signed by a majority of the members of the county commissioners court
in each county or counties in which the district is proposed. The petition
shall include the following: 

(A) a boundary description by metes and bounds or lot and
block number if there is a recorded map or plat and survey; 

(B) a statement of the general nature of the work proposed
and an estimated cost of the work proposed; and 

(C) the proposed name of the district; 

(2) a map showing the district boundaries in metes
and bounds, area, physical culture, and computation sheet for survey closure;
(3) a preliminary engineering report including: 

(A) a description of the existing area, conditions, topography
and proposed improvements; 

(B) preliminary itemized cost estimate for the proposed improvements
and associated plans for financing such improvements; 

(C) a listing of other entities capable of providing same
or similar services and reasons why those are unable to provide such services;
(D) copies of any agreements, meeting minutes, contracts,
or permits executed or in draft form with other entities including but not
limited to federal, state or local entities or governments or persons; 
(E) an evaluation of the effect the district and its projects
will have on the following: 

(i) land elevations; 

(ii) subsidence/groundwater level and recharge; 

(iii) natural run-off rates and drainage; 

(iv) water quality; 

(F) a table summarizing overlapping taxing entities and the
most recent tax rates by those entities; 

(G) complete justification for creation of the district supported
by evidence that the project is feasible, practical, necessary and will benefit
all the land to be included in the district; 

(4) affidavits by those persons desiring appointment
by the commission as temporary or initial directors, showing compliance with
applicable statutory requirements of qualifications and eligibility for 
temporary
or initial directors, in accordance with Texas Water Code, sec.sec.66.102
and 49.052 where applicable; and 

(5) other data as the executive director may require.
(j) Creation applications for Chapter 375, Local Government
Code, Municipal Management Districts shall contain the items listed in 
subsection
(a) of this section and the following: 

(1) a petition requesting creation signed by owners of a majority
of the assessed value of real property in proposed district, or 50 persons
who own property in the proposed district, if more than 50 people own real
property in the proposed district. The petition shall include the following:
(A) a boundary description by metes and bounds, or lot and
block number if there is a recorded map or plat and survey; 

(B) purpose(s) for which district is being created; 

(C) general nature of the work, projects or services proposed
to be provided, the necessity for those services, and an estimate of the
costs associated with such; 

(D) include name of proposed district, which must be generally
descriptive of the location of the district, followed by "Management District";
(E) list proposed initial directors and experience and term
of each; and, 

(F) include a resolution of municipality in support of creation,
if inside a city; 

(2) a preliminary plan or report providing sufficient
details on the purpose and projects of district as allowed in Chapter 375,
Local Government Code including budget, statement of expenses revenues and
sources of such revenues; 

(3) a certificate by the county tax assessor indicating
the owners and tax valuation of land within the proposed district as reflected
on the county tax rolls as of the date of the petition or any amended petition.
If the tax rolls do not show the petitioner(s) to be the owners of the majority
of value of the land within the proposed district, then the petitioner(s)
shall submit to the executive director a certified copy of the deed(s) tracing
title from the person(s) listed on the county tax rolls as owners of the
land to the petitioner(s) and any additional information required by the
executive director necessary to show accurately the ownership of the land
to be included in the district. 

(4) affidavits by those persons desiring appointment by
the commission as initial directors, showing compliance with applicable 
statutory
requirements of qualifications and eligibility for initial directors, in
accordance with sec.375.063 of the Texas Local Government Code.

sec.293.12. Creation Hearing Notice Actions and Requirements. 
(a) The chief clerk shall set the petition for hearing by the
commission and issue notice thereof. 

(b) The hearing notice actions and requirements for Texas Water
Code, Chapter 36, Groundwater Conservation Districts, are as follows: 

(1) notice must be published not later than the 30th day before
the date of the hearing in at least one newspaper with general circulation
in the county or counties in which the proposed district is to be located;
(2) posted on the bulletin board used for posting legal
notices in each county in which all or part of the proposed district is to
be located; and 

(3) if a petition for the creation of a groundwater conservation
district contains a request to create or alter the boundaries of a groundwater
management area in all or part of the proposed district, the notice must
also be given in accordance with the requirements of Texas Water Code, 
sec.35.006
and sec.sec.293.21-293.25 of this title (relating to Designation of Groundwater
Management Areas); 

(c) The hearing notice actions and requirements for Texas Water
Code Chapter 51, multi-county Water Control & Improvement Districts,
and for Chapter 58, multi-county Irrigation Districts are as follows: 

(1) The chief clerk shall prepare one original and three copies
of the notice for each county and send to the county clerk of each county
in which the proposed district may be located. The county clerk shall retain
one copy and deliver the original and two copies to the county sheriff; 
(2) The sheriff of each county shall post one copy at
the courthouse door of that county 15 days before the hearing and publish
one in a newspaper of general circulation in that county once a week for
two consecutive weeks. The first publication shall be at least 20 days before
the hearing. 

(d) The hearing notice actions and requirements for Texas Water
Code, Chapter 54, Municipal Utility Districts and Chapter 59, Regional Districts
are as follows: 

(1) The chief clerk shall send a copy of the notice of hearing
to all cities which have extraterritorial jurisdiction in the county or counties
in which the proposed district is located and which have formally requested
notice of creation of all districts in their county or counties. The chief
clerk shall prepare a certificate indicating that notice was properly mailed
to all these cities. 

(2) The chief clerk shall send a copy of the notice of
hearing to the petitioners, or their agents, who shall: 

(A) cause the notice to be published in a newspaper with general
circulation in the county or counties in which the proposed district is located
once a week for two consecutive weeks with the first publication being at
least 30 days prior to the date of the commission hearing; 

(B) send the notice of the hearing by certified mail, return
receipt requested, to all fee simple landowners, as reflected on the county
tax rolls, whose property is located within the proposed district, except
those who have signed the petition for creation at least 30 days prior to
the date of the commission hearing. Ownership of the property shall be certified
by the tax assessor and collector from the tax rolls as of the date of 
submitting
the petition to the executive director. 

(e) The hearing actions and notice requirements for Texas Water
Code, Chapter 55, Water Improvement Districts to be located in more than
one county are as follows: 

(1) the chief clerk shall send a copy of the notice of hearing
to the commissioners court of each county where land in the proposed district
is located. 

(2) The county clerk of each county shall post notice
of the time and place of the hearing at the courthouse door. 

(f) The hearing actions and notice requirements for Texas Water
Code, Chapter 65, Special Utility Districts notice of the creation and transfer
of the certificate of convenience and necessity, and for approval of an impact
fee, if applicable, shall be accomplished as follows: 

(1) The chief clerk shall send a copy of the notice of hearing
to all cities which have extraterritorial jurisdiction in the county or counties
in which the proposed district is located and which have formally requested
notice of creation of all districts in their county or counties. The chief
clerk shall prepare a certificate indicating that notice was properly mailed
to all these cities. 

(2) The chief clerk shall send a copy of the notice to
the Public Utility Commission. 

(3) The chief clerk shall send a copy of the notice of
hearing to the petitioners, or their agents, who shall: 

(A) cause the notice to be published in a newspaper with general
circulation in the county or counties in which the proposed district is located
once a week for two consecutive weeks with the first publication being at
least 14 days prior to the date of the commission hearing. 

(B) unless waived by executive director, mailed to customers
of the water supply corporation and other affected parties at least 120 days
prior to the date of the hearing including the following: 

(i) name and business address of the district; 

(ii) a description of the service area involved; 

(iii) the anticipated effect of the conversion on the operation
or the rates and services provided to customers; and 

(iv) a statement that persons may attend the hearing and participate
in the process. 

(C) Impact fee notice to be mailed to owners of property within
the proposed district, except customers of the water supply corporation,
at least 30 days prior to the date of the commission hearing, if the application
for conversion concurrently requests approval of an impact fee. 

(g) The hearing action and notice requirements for Texas Water
Code, Chapter 66, Stormwater Control Districts, are that the chief clerk
shall send a copy of the notice of hearing to the petitioners, or their agents,
who shall cause the same to be published in a newspaper with general circulation
in the county or counties in which the proposed district is located once
a week for two consecutive weeks with the first publication being at least
30 days prior to the date of the commission hearing. 

(h) The hearing action and notice requirements for Local Government
Code, Chapter 375, Municipal Management Districts are as follows: 

(1) The chief clerk shall send a copy of the notice of hearing
to all counties in which the proposed district is located and all municipalities
which have extraterritorial jurisdiction in the county or counties in which
the proposed district is located and which have formally requested notice
of creation of all districts in their county or counties. The chief clerk
shall prepare a certificate indicating that notice was properly mailed to
any such counties and/or municipalities. 

(2) The chief clerk shall send a copy of the notice of
hearing to the petitioners, or their agents, who shall: 

(A) cause the notice to be published in a newspaper with general
circulation in the municipality in which the proposed district is located
once a week for two consecutive weeks with the first publication being at
least 31 days prior to the date of the commission hearing; 

(B) send the notice of the hearing by certified mail, return
receipt requested, to all property owners within the district at least 30
days before the hearing.

sec.293.13. Commission Actions Following Creation
Hearing.
(a) If the commission finds that the petition does not conform
to the requirements of the applicable statutes the commission shall deny
the petition. With respect to regional plan implementation agencies, the
commission will consider the regional plan submitted with the petition in
connection with its findings. 

(b) If the commission grants the petition for creation: 

(1) the commission shall issue an order including a finding
that the project meets applicable statutory requirements; 

(2) if the commission finds that any of the lands to be
included in the district will not be benefited by the creation of the district,
the commission shall exclude the lands not to be benefited and shall redefine
the boundaries of the proposed district to include only those lands that
will receive benefits from the district; 

(3) the commission shall appoint directors as provided
in applicable statutes, who shall serve until permanent directors are elected
and qualified; 

(c) A copy of the order of the commission granting or denying
the petition shall be mailed by the chief clerk to each city having 
extraterritorial
jurisdiction and/or to each county. 

sec.293.14. District Reporting Actions Following
Creation.
(a) A certified copy of the order canvassing results of the
confirmation election shall be recorded in the office of the county clerk
of each county in which a portion of the district lies and shall be submitted
to the executive director. 

(b) The governing board of the district shall submit to the
executive director the information required by sec.293.92 of this title
(relating to Additional Reports and Information Required of Certain Districts)
and a certificate from the county clerk of each county in which all or part
of the district is located showing compliance with Texas Water Code, sec.49.455.
The certificate shall show on its face the date of the confirmation election,
and the date that the information required by Texas Water Code, sec.49.455,
was filed with the county clerk(s).

sec.293.15. Addition of Wastewater and/or Drainage
Powers and Conversion of Districts into Municipal Utility Districts.
(a) Any water improvement district, water control and improvement
district, fresh water supply district, levee improvement district, irrigation
district or any other conservation and reclamation district or any special
utility district created under the Texas Constitution, Article XVI, sec.59,
may be converted into a municipal utility district operating under the Texas
Water Code, Chapter 54 or obtain additional wastewater and/or drainage powers.
(b) The application shall be accompanied by the following:
(1) a certified copy of the resolution adopted by the board
of directors requesting the commission to hold a hearing on the question
of conversion of the district or the addition of wastewater and/or drainage
powers for the district; 

(2) a $700 application fee plus the cost of required notice,
if any; 

(3) unless waived by the executive director, a preliminary
plan (22-24 inches by 36 inches or digital data in electronic format) showing
the location of existing facilities including highways, roads, and other
improvements together with the location of proposed utility mains and sizing,
general drainage patterns, principal drainage ditches and structures, utility
plant sites, recreational areas, commercial and school sites, areas within
the 100-year flood plain, and any other information pertinent to the project;
(4) unless waived by the executive director, a preliminary
engineering report including: 

(A) a description of existing area, conditions, topography
and proposed improvements; 

(B) land use plan; 

(C) 100-year flood computations or source of information;
(D) existing and projected populations; 

(E) tentative itemized cost estimates of the proposed capital
improvements, if any and itemized cost summary for anticipated bond issue
requirements; 

(F) projected tax rate and water and wastewater rates; and
(G) total tax assessments on all land within the district.
(5) other data and information as the executive director
may require. 

(c) Prior to the hearing, the following requirements shall
be met with evidence of such compliance filed with the chief clerk at or
prior to the hearing: 

(1) Notice of the hearing in a form issued by the chief clerk
shall be given by publishing notice in a newspaper with general circulation
in the county or counties in which the district is located. The notice shall
be published once a week for two consecutive weeks with the first publication
to be made not less than 30 days before the time set for the hearing. The
notice shall: 

(A) state the time and place of the hearing; 

(B) set out the resolution adopted by the district in full;
and 

(C) notify all interested persons to appear and offer testimony
for or against the proposed contained in the resolution. 

(2) at least 30 days before the date of the hearing,
notice of the hearing shall be sent by certified mail, return receipt requested,
to all fee simple landowners, as reflected on the county tax rolls, whose
property is located within the proposed district unless good cause is shown
why such notice by mail should not be given. 

(3) ownership of the property shall be certified by the
tax assessor and collector from tax rolls or as reflected by the records
of the appraisal district, whichever is more current, as of the date of the
submitting the resolution to the commission. 

(4) the district shall file its resolution requesting
conversion or additional powers with the city secretary or clerk of each
city, in whose corporate limits or extraterritorial jurisdiction any part
of the district is located, concurrently with submitting its application
for conversion to the commission. 

(d) A special utility district formed pursuant to the Texas
Water Code, Chapter 65, which applies for conversion to a district having
taxing authority that provides water, wastewater or other public utility
services, must comply with the requirements of Local Government Code, 
sec.42.042.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614279
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Designation of Groundwater Management Areas
30 TAC sec.sec.293.21-293.25
The amendment and new sections are adopted under the Texas
Water Code, sec.sec.5.103, 5.105, and 5.235, which provide the Texas
Natural Resource Conservation Commission (commission) with the authority
to adopt any sections necessary to carry out its powers and duties under
the Texas Water Code and other laws of the State of Texas, to establish and
approve all general policy of the commission, and to collect statutory fees
from persons submitting various applications to the commission. 

sec.293.21. Designation of Groundwater Management
Area Through Rulemaking.
(a) These sections only apply to the designation of groundwater
management areas as authorized by Water Code, sec.35.004, but shall not
apply to proceedings for the designation of groundwater management areas
in progress on the effective date of these sections. 

(b) Designation of a groundwater management area is a separate
proceeding from that for creation of a groundwater conservation district.
(c) In accordance with Water Code, sec.35.004, on its own
motion or on receiving a petition, the commission may initiate a rulemaking
to designate a groundwater management area. Through the rulemaking process,
the commission will determine the boundaries of such a management area with
the objective of providing the most suitable area for the management of the
groundwater resources of the part of the state where a groundwater conservation
district is or may be located. To the extent feasible, the management area
will coincide with the boundaries of a groundwater reservoir or a subdivision
thereof. The commission may also consider other factors in determining the
boundaries of the management area, such as the boundaries of other political
subdivisions and the appropriateness of the size and configuration of the
management area to a groundwater conservation district's performance of its
duties under Water Code, sec.sec.36.101-36.121. 

(d) Upon the request of the commission or any person interested
in a petition to designate a groundwater management area, the executive director
will prepare available evidence relating to the configuration of a groundwater
management area. The evidence prepared by the executive director shall include
information concerning the existence, configuration, and characteristics
of a groundwater reservoir or subdivision thereof. The evidence prepared
by the executive director shall be made part of the rulemaking record. 
(e) The commission shall designate groundwater management areas
using the procedures applicable to rulemaking under the Administrative Procedure
Act (Subchapter B, Chapter 2001, Government Code) except where such procedures
conflict with those set forth in the Texas Water Code, Chapter 35. 

(f) A petition for designation of an underground water management
area must be submitted to the executive director and be accompanied by a
$100 application fee and petition recording fee of $1.00 per page.

sec.293.22. Petition for Adoption of Rules Designating
a Groundwater Management Area.
(a) A petition may be submitted to the executive director for
the sole purpose of requesting that the commission designate a management
area for all or part of one or more counties. 

(b) A petition submitted pursuant to this section must be signed
by: 

(1) a majority of the landowners in the proposed management
area; or 

(2) if there are more than 50 landowners in the proposed
management area, the petition must be signed by at least 50 of those landowners.
(c) A petition submitted pursuant to this section must contain
the following statement: "Petitioners request that the Texas Natural Resource
Conservation Commission designate a groundwater management area to include
all or part of _____________ County (Counties). The management area shall
be designated with the objective of providing the most suitable area for
the management of groundwater resources of the part of the state in which
a district is to be located. Petitioners understand that this petition requests
only the designation of a management area, but that all or part of the land
in the management area designated may later be added to an existing groundwater
conservation district or become a new groundwater conservation district as
provided by Chapter 36 of the Texas Water Code." 

(d) A petition shall include a map that shows the location
of the proposed management area and may include any other information desired
by the petitioners concerning the proposed management area. 

(e) The petitioners shall submit the petition to the executive
director. 

(f) The petitioners shall supply any additional information
requested by the commission or the executive director.

sec.293.23. Commission Consideration of Petition
for Adoption of Rules Designating a Groundwater Management Area.
Within 60 days of the receipt of a Petition To Designate a Groundwater
Management Area the commission shall initiate a rulemaking proceeding or
deny the petition. If the commission denies the petition, it shall issue
an order which sets forth the reasons for denying the petition. 

sec.293.24. Notice of Commission Consideration of
Final Adoption of Rules Designating a Groundwater Management Area.
(a) In addition to the notice prescribed by the Administrative
Procedure Act (Subchapter B, Chapter 2001, Government Code), the petitioners
shall have notice published in at least one newspaper with general circulation
in the county or counties in which the proposed management area is to be
located. Notice must be published not later than the 30th day before the
date set for the commission to consider the final adoption of the rules 
designating
the management area. 

(b) The notice must include: 

(1) a statement of the general purpose and effect of designating
the proposed management area; 

(2) a map generally outlining the boundaries of the proposed
management area or notice of the location at which a copy of the map may
be examined or obtained; and 

(3) the time and place at which the commission will consider
the final adoption of rules designating the management area. 

(c) If the commission initiates the rulemaking proceeding on
its own motion, the chief clerk shall give the same notice as required to
be given by the petitioner under this section. 

sec.293.25. Alteration of Groundwater Management
Area.
In accordance with Water Code, sec.35.004, on its own motion or on
receiving a petition, the commission, after notice and hearing, may initiate
a rulemaking proceeding to alter the boundaries of a designated management
area as required by changed or future conditions and as justified by factual
data. A petition for alteration of management area boundaries must allege
in detail the facts and circumstances making alteration necessary and be
accompanied by a $100 application fee and petition recording fee of $1.00
per page. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614280
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Designation of Underground Water Areas
30 TAC sec.sec.293.22-293.24
The repeals are adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614272
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Appointment of Directors
30 TAC sec.sec.293.32-293.35
The amendments and new section are adopted under the Texas
Water Code, (Vernon 1992), sec.sec.5.103, 5.105, and 5.235, which provide
the Texas Natural Resource Conservation Commission (commission) with the
authority to adopt any rules necessary to carry out the powers and duties
under the provisions of the Texas Water Code and other laws of this state,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
sec.293.33. Commission Appointment of Directors.
Requests for Appointment shall be accompanied by the following: 

(1) petition signed by a landowner within the district requesting
appointment of temporary directors or directors to fill one or more vacancies
on the board; 

(2) evidence of each former director's failure or refusal
to qualify or serve for each vacancy on the board to be filled; 

(3) requests for consideration of appointment as director
in the form shown in sec.293.34 of this title (relating to Form of Affidavit
for Appointment as Director) for those persons desiring consideration as
director for vacant positions; 

(4) certified mail receipt verifying that notice of the
application for appointment of directors was sent to the district's official
address and each director as shown on the district's latest registration
form.  

(5) an application fee of $100; and 

(6) any other information as the executive director may
require.

sec.293.34. Form of Affidavit for Appointment as
Director.
The following form of affidavit must be completed, executed, and filed
with the chief clerk at least ten working days prior to the commission hearing
on the appointment of such directors.

Figure: 30 TAC sec.293.34

sec.293.35. Reinstatement of a Board Member.
(a) If a board by unanimous vote of its remaining members has
removed a board member pursuant to Water Code, sec.49.052(g), that board
member may submit a written appeal to the executive director within 30 days
after receiving written notice of the board action. The commission may reinstate
a removed director if the commission finds that the removal was unwarranted
under the circumstances, including the reasons for absences, the time and
place of the meetings missed, the business conducted at the meetings missed,
and any other facts or circumstances the commission may deem relevant. 
(b) A removed board member desiring to appeal the decision
of the district's board of directors shall submit an application to the 
executive
director. The application shall consist of the following: 

(1) a written request by the removed board member requesting
commission review; 

(2) an application fee of $100; 

(3) copies of the district's board meeting minutes for
the 12 months prior to the date of the board member's removal; 

(4) a statement as to why the removed board member believes
that his/her removal was unwarranted, along with supporting documentation
to support the statement, including the reasons for absences, the time and
place of the meetings missed, the business conducted at the meetings missed,
and any other relevant facts or circumstances; and 

(5) such other information which the commission considers
material to a determination of whether the removed board member should be
reinstated as a director of the district or the district's actions in removing
the board member were warranted and reasonable. 

(c) The executive director will examine the application and
the facts and circumstances contained therein and will prepare a written
report which will be submitted to the commission. A copy of the report will
be mailed to the removed board member, the directors of the district, the
district's official address and any other interested parties, including the
district's attorney, if known. 

(d) After consideration, the commission will determine whether
the removed board member will or will not be reinstated. The commission will
enter the appropriate order, either reinstating the applicant to the district's
board of directors or confirming the board's decision to remove the board
member.

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614281
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Issuance of Bonds
30 TAC sec.293.41
The repeal is adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614282
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

30 TAC sec.sec.293.41, 293.42-293.44, 293.46-293.48, 293.50, 293.55-293.57,
293.59, 293.60, 293.61
The amendments and new sections are adopted under the Texas
Water Code, (Vernon 1992), sec.sec.5.103, 5.105, and 5.235, which provide
the Texas Natural Resource Conservation Commission (commission) with the
authority to adopt any rules necessary to carry out the powers and duties
under the provisions of the Texas Water Code and other laws of this state,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
sec.293.42. Submitting of Documents.
Applicants shall submit all of the required data at one time in one
package. Applications may be returned for completion if they do not satisfy
the requirements and conform to the bond application report format. 

sec.293.46. Construction Prior to Commission Approval. 
The developer may proceed with financing or construction of water,
wastewater and drainage facilities contemplated for purchase by the district
prior to commission approval of the bond issue designed to finance the project
under the following conditions: 

(1) (No change.) 

(2) All construction plans, specifications, and contract
documents as set forth in sec.293.62 of this title (relating to Construction
Related Documents To Be Submitted to the Commission), change orders and 
supporting
engineering data for construction or installation of the facilities shall
be submitted to the appropriate commission field office in a timely manner,
together with evidence that the materials have been filed with and approved
by the district and have been noted in the district's minutes (if the district
has not been created, the documents shall be filed with the district within
30 days after creation). 

(3)-(4) (No change.) 

(5) Contract advertising and award and construction and
installation of facilities shall be accomplished in the manner required by
the general law for districts and in conformity with commission rules. For
construction contracts awarded after the effective date of this subsection
(September 5, 1986), if substantial compliance with statutory requirements
is not achieved, reimbursement to a developer may be limited to the final
construction contract amount, or a lesser amount, if more reflective of the
actual value of such facilities as may be determined by the commission, without
developer interest. 

(6)-(8) (No change.)

sec.293.48. Street and Water, Wastewater and Drainage
Utility (street and utility) Construction by Developer.
Except as otherwise provided, unless street and utility construction
is completed within the area to be developed by the proposed bond issue,
the developer must provide assurance to the satisfaction of the executive
director, prior to advertisement for sale of the district's bonds, that such
street and utility construction will be completed as hereinafter provided.
(1) The developer must enter into an agreement with the district,
secured by a letter of credit, specifying that if street and utility 
construction
is not completed within a reasonable and specified period of time after the
district sells its bonds, the district may award a contract for completion
of the streets and utilities with financing to be accomplished by utilizing
the letter of credit; provided, however, the district shall not proceed in
such a manner until the executive director, after having given at least ten
days written notice to both the district and the developer, has reviewed
the matter, either on the petition of the district or on his own motion and
has approved the district's awarding of the contract and utilization of the
letter of credit; and provided further, the executive director may extend
the time for the developer to complete the streets and utilities if the 
developer
renews the letter of credit and adequately compensates the district for lost
revenues and taxes resulting from failure to complete the streets and utilities
within the specified time. In the event that the letter of credit has not
been renewed or replaced 45 days prior to its expiration date, or in the
event that the developer commences any proceeding, voluntary or involuntary,
or any proceeding, voluntary or involuntary, is commenced against the developer
involving the bankruptcy, insolvency, reorganization, liquidation, or 
dissolution
of the developer, or any receiver is appointed for the developer, or the
developer makes a general assignment for the benefit of creditors, the district
shall have the immediate right to draw down the lesser of the current cost,
as estimated by the district's engineer, to construct the streets and utilities,
or the entire remaining balance of the letter of credit. The current estimated
costs to construct the streets and utilities shall include construction contract
amounts, engineering, surveying and testing fees, and a 10% contingency.
The district shall deposit such funds in a separate account and shall not
commit or expend such funds until the executive director has held the hearing
and authorized use of the funds as provided in this subsection. Within 30
days after final completion of the streets and utilities, the district shall
provide an accounting of the use of funds drawn pursuant to the provisions
hereof and shall refund any remaining funds, including accrued interest,
if any, to the developer or his designee. A district shall not allow any
letter of credit to expire, except upon completion of the paving in substantial
compliance with the agreement or written approval of the executive director.
A copy of the street and utility construction agreement meeting the criteria
specified in sec.293.57 of this title (relating to Form of Street and Utility
Construction Agreement), the letter of credit and any amendments or renewals
thereof shall be submitted to the executive director within ten days after
their execution or receipt by the district. The letter of credit must be
from a financial institution meeting the qualifications as specified in 
sec.293.56
of this title (relating to Requirements for Letters of Credit). 

(2) The developer shall include in the street and utility
construction contract a provision that places the responsibility on the 
contractor
for repair and clean-up of broken manholes, buried valve boxes, broken 
wastewater
pipe, and all other damage to district facilities caused by construction
of streets and utilities. 

(3)-(4) (No change.)

sec.293.61. Bond Related Documents To Be Submitted
to the Commission.
Every district required to obtain commission approval of its projects
relating to the issuance and sale of bonds as indicated in sec.293.41 of
this title (relating to Approval of Projects and Issuance of Bonds), is required
to submit the following bond related reports and/or documents: 

(1) If the commission directs funds from the bond issue to
be escrowed, a certified copy of the executed escrow agreement with an 
authorized
financial institution of the district's choice shall be submitted within
five days of that transaction. 

(2) The district shall submit to the executive director
a copy of the final official statement within 30 days after the final official
statement is issued. The executed contract for the sale of the bonds and
debt service schedule shall be submitted to the executive director within
30 days after execution of the contract.

This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.

Issued in Austin, Texas, on September 30, 1996.
TRD-9614283
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Conditional Approval
30 TAC sec.293.60
The repeal is adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614284
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

District Actions if the Commission Approves the Engineering Project and
Issuance of Bonds 
30 TAC sec.293.61
The repeal is adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614285
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

District Actions Related to Construction Projects and Purchase of Facilities
30 TAC sec.sec.293.62, 293.63, 293.68-293.70
The amendments are adopted under the Texas Water Code, (Vernon
1992), sec.sec.5.103, 5.105, and 5.235, which provide the Texas Natural
Resource Conservation Commission with the authority to adopt any rules necessary
to carry out the powers and duties under the provisions of the Texas Water
Code and other laws of this state, to establish and approve all general policy
of the commission, and to collect statutory fees from persons submitting
various applications to the commission.

sec.293.62. Construction Related Documents To Be
Submitted to the Commission.
Every district required to obtain commission approval of its projects
relating to the issuance and sale of bonds as indicated in sec.293.41 of
this title (relating to Approval of Projects and Issuance of Bonds), is required
to submit the following construction related reports and/or documents: 
(1) (No change.) 

(2) As the construction progresses, provide to the appropriate
agency field office: 

(A) engineer's monthly construction progress reports and monthly
pay estimates for contract partial payments within 10 days after payment;
(B) copies of proposed change orders; 

(C) copies of infiltration/exfiltration tests for wastewater
lines and test results of water lines prior to final construction inspection;
(D)-(F) (No change.) 

(3) (No change.) 

sec.293.68. Document Identification.
All bond related documents submitted to the executive director should
be properly labeled in the upper right hand corner of the cover page with
the name of the district, amount of bonds approved which included funding
for the project and the date of approval. If the project is to be funded
by a future bond issue, state "future bond issue" under the name of the 
district. 
sec.293.69. Purchase of Facilities.
(a) A district shall not purchase facilities financed or constructed
by a developer, investor owned utility or water supply corporation in 
contemplation
of sale to the district or assume facility contracts from the developer or
reimburse the developer, investor owned utility or water supply corporation
for funds advanced to finance construction of facilities until the executive
director has inspected the project, reviewed contract administration, and
given written authorization to finalize the purchase or reimbursement. The
executive director shall inspect the facilities and, subject to the requirements
contained in this subsection, issue his written approval or disapproval of
such proposed purchase within 30 days after receipt of written request from
a district or a district's authorized representative. The written approval
shall be valid for 120 days. 

(b) If the purchase of facilities or reimbursement of funds
to the developer, investor owned utility or water supply corporation is not
completed within 120 days after the date of the executive director's written
approval, the district shall again obtain the written approval as provided
herein. 

(c)-(g) (No change.) 

sec.293.70. Audit of Payments to Developer.
(a) Prior to the payment of funds to a developer from bond
proceeds, bond anticipation note proceeds, funds to be derived from future
bond proceeds, or maintenance tax revenue the governing board of directors
of the district shall engage an auditor to perform certain agreed upon 
procedures
applicable to all items and amounts for which a reimbursement request has
been received. The auditor must be a certified public accountant or public
accountant holding a permit from the Texas State Board of Public Accountancy.
(b) As a minimum, the following procedures shall be included
to the extent applicable. 

(1)-(4) (No change.) 

(5) A determination shall be made that the items and amounts
to be reimbursed are appropriate and in accordance with commitments or policies
of the district and interoffice memorandums, orders and rules of the commission
as a result of the procedures followed and subject to such limitations as
may apply. 

(c) (No change.)

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614286
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Other Actions Requiring Commission Consideration for Approval 
30 TAC sec.sec.293.80, 293.83, 293.88
The amendments and new sections are adopted under the Texas
Water Code, (Vernon 1992), sec.sec.5.103, 5.105, and 5.235, which provide
the Texas Natural Resource Conservation Commission with the authority to
adopt any rules necessary to carry out the powers and duties under the 
provisions
of the Texas Water Code and other laws of this state, to establish and approve
all general policy of the commission, and to collect statutory fees from
persons submitting various applications to the commission.

sec.293.80. Revenue Notes.
(a) A district, as defined by Water Code, sec.49.001 may
not execute a revenue note as described by Water Code, sec.49.153 for a
term longer than three years unless approved by the commission. 

(b) This rule does not apply to special water authorities,
as defined by Water Code, sec.49.001. 

(c) Applications for commission approval of revenue notes except
as provided in subsection (d) of this section shall include the following:
(1) a resolution by the governing board requesting approval
of the revenue note; 

(2) documents indicating district ownership of the facility;
(3) a detailed explanation of the intended use and project
to be financed, and complete justification for the proposed revenue note;
(4) a copy of the district's current Rate Order or Amended
Rate Order; 

(5) a proposed amortization schedule for the revenue note;
(6) a draft of the proposed revenue note; 

(7) copies of the district's current operating budget
and estimates of revenues and expenses for the years associated with the
revenue note; 

(8) copies of all existing notes, liens or judgements
against revenues associated with the facility; 

(9) an application fee in the amount of $100; and 

(10) other information as the executive director may require.
(d) Revenue notes proceeds of which are used to reimburse a
developer as defined in the Water Code, sec.49.052(d) are subject to 
sec.sec.293.41-293.61
of this title (relating to the Issuance of Bonds).

sec.293.83. District Use of Surplus Funds For Any
Purpose And Use of Maintenance Tax Revenue for Certain Purposes.
(a) Except as provided in subsection (c) (3), (4), and (5)
of this section, a district contemplating use of surplus bond funds, interest
earned on invested bond proceeds, grants, contributions by others for costs
sharing of facilities constructed with bond funds and litigation settlements
related to projects financed by bond proceeds must receive approval from
the executive director prior to obligation of these funds for any purpose.
(b) A district contemplating the use of operation and maintenance
tax revenue for reimbursement to a developer (as defined in Water Code, 
sec.49.052
(d)), of property, or its assigns, for planning, construction, or acquiring
facilities must receive approval from the executive director. 

(c) Application requirements are: 

(1) For engineering projects, the following documents shall
be submitted: 

(A) a resolution by the governing board requesting approval
of the project; 

(B) construction plans and specifications approved by all
agencies having jurisdictional responsibilities; 

(C) a detailed explanation of the project; 

(D) a detailed cost summary; 

(E) if developer reimbursement from an operation and maintenance
tax, operating budgets showing revenues and expenditures over the years from
which the operation and maintenance tax revenue is derived; 

(F) the number of utility connections to be added (if applicable)
and area served; 

(G) engineer's certification as to the availability and sufficiency
of water supply and wastewater treatment capacities to serve such additional
connections; 

(H) a written statement from district's bookkeeper stating
the amount and source of funding including how available funds were generated;
(I) the 100-year flood data for area to be served if not previously
provided; 

(J) evidence of compliance with the requirements of sec.sec.293.41-293.60
of this title. 

(K) an application fee in the amount of $100; and 

(L) other information as the executive director may require.
(2) For expenditures other than engineering projects,
the following documents shall be submitted: 

(A) a resolution by the governing board requesting approval
of the expenditure; 

(B) a complete justification and explanation of purpose for
which the funds are proposed for expenditure; 

(C) if developer reimbursement from an operation and maintenance
tax, operating budgets showing revenues and expenditures over the years from
which the operation and maintenance tax revenue is derived; 

(D) other information as the executive director may require;
and 

(E) an application fee in the amount of $100. 

(3) Subject to the requirements prescribed in paragraph
(4) of this subsection, a district which has a no-growth tax rate of $2.00
per $100 assessed valuation or less calculated by dividing its average annual
debt service on existing tax supported debt by current taxable assessed 
valuation/100,
may use surplus funds for improvements necessary to serve development within
the district as follows without further approval: 

(A)-(B) (No change.) 

(C) pump stations and force mains located within the boundaries
of the district which directly connect the districts wastewater system to
a regional plant. 

(D) alternate water supply interconnects between two or more
districts. 

(4) Districts contemplating the use of surplus funds
as provided in paragraph (3) of this subsection must: 

(A)-(B) (No change.) 

(C) report expenditures of all surplus funds in their annual
audit report in the notes to the financial statements disclosing any amounts
transferred among the funds including the use of surplus funds and the authority
for such transfers. 

(d) A district may transfer surplus interest earnings on invested
bond proceeds to its debt service account without executive director approval
if permitted by its bond covenants and if such funds are not committed for
other purposes.

sec.293.88. Petition for Authorization to Proceed
in Federal Bankruptcy.
(a) A district desiring to proceed under the Federal Bankruptcy
Code, Chapter 9 (11 United States Code, sec.sec.901-946) or any other
federal bankruptcy law shall submit an application requesting authorization
pursuant to Water Code, sec.49.456. The application shall consist of the
following: 

(1) a certified copy of the resolution adopted by the board
of directors or other governing body requesting such authorization; 

(2) an application fee of $100 plus the cost of required
notice; 

(3) a district status report with all information current
and certified within 30 days prior to the date of submittal; 

(4) a comparison of the projections or assumptions of
growth, taxes, revenues and expenses submitted to the commission in connection
with the approval of the bonds issued most recently by the district, or,
if commission approval was not required, the projections or assumptions used
by the district in connection with the bonds most recently issued by the
district, to the actual growth, taxes, revenues and expenses; 

(5) a description of the reasons that, in the opinion
of the governing body of the district, the projections and assumptions used
in connection with the most recent issue of bonds were not realized and any
other factors which have caused the district financial difficulties; 

(6) a complete analysis of the tax rate, user fees or
other charges or sources of revenues that the district may lawfully impose
that would be necessary in order for the district to meet its debts and 
obligations
as they become due and the impact of such taxes and fees upon taxpayers and
users within the district; 

(7) a complete analysis of the reasons that the district
cannot, through the full exercise of its rights and powers under the laws
of this state, reasonably expect to meet its debts and other obligations
as they mature; 

(8) a statement of whether the district has complied with
the commission order, approving the issuance of bonds, and this chapter;
(9) a list of the names and addresses of all creditors
of the district or a statement explaining the reasons for the inability to
obtain such a list and the efforts taken to identify such creditors; 

(10) the plan of adjustment of the district's debt which
it proposes to file in the bankruptcy proceeding if the commission authorizes
the district to proceed; and 

(11) such other information which the commission considers
material to a determination of whether authorization to proceed in bankruptcy
should be granted. 

(b) The chief clerk shall mail written notice to all creditors
shown in the district's application, all developers and their lienholders
and the top ten taxpayers shown in the district status report, the city in
whose corporate limits or extraterritorial jurisdiction the district is located,
if any, and the county in which the district is located. The chief clerk
shall publish notice of the application at least once a week for two consecutive
weeks in a newspaper of general circulation in the county in which the district
is located. The chief clerk shall also publish notice of the application
once in the Texas Bond Reporter of Austin, The Daily Bond Buyer, The Weekly
Bond Buyer, or The Wall Street Journal. Such notices shall be mailed or 
published
within 30 days of the date an administratively complete application is received
by the executive director. No hearing on the application shall be held less
than 30 days after such notices are given, mailed or published. 

(c) If, after hearing and consideration of all evidence, the
commission determines that the district cannot, through the full exercise
of its rights and powers under the law of this state, reasonably expect to
meet its debts and other obligations as they mature, the commission may 
authorize
the district to proceed in bankruptcy. 

(d) If, after hearing, the commission determines that the district
can, through the full exercise of its rights and powers under the laws of
this state, reasonably expect to meet its debt and other obligations as they
mature, the commission shall deny the district's application and shall order
the district to adopt specific measures to generate sufficient revenues to
meet its obligations. The commission shall also require the district to submit
periodic reports on the implementation of the measures required by the 
commission
and its current financial condition. 

(e) The commission may assess additional fees adequate to cover
its cost in administering this section. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614273
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Reports
30 TAC sec.sec.293.91-293.97
The amendments are adopted under the Texas Water Code, sec.5.103
and sec.5.105, which provide the Texas Natural Resource Conservation Commission
with the authority to adopt any rules necessary to carry out its powers and
duties under the Water Code and other laws of the State of Texas, and to
establish and approve all general policy of the commission.

sec.293.91. Reporting by Districts.
(a) All districts are required to submit certain documents
and reports to the executive director by the Texas Water Code, Chapter 49,
as follows: 

(1) a certified copy of the order or legislative act creating
the district within 60 days after the date the district is created; 

(2) certified copy of the order of the district's governing
board changing the boundaries of the district within 60 days after the date
of any boundary change together with a linen tracing or other map of equal
quality showing the new boundaries; 

(3) a written notification to the executive director of
the name, mailing address and date of expiration of term of office of any
elected or appointed director within 30 days after the date of the election
or appointment; 

(4) a certified copy of the audit report within 15 days
after the date of completion of any audit of the affairs of the district,
other than the annual audit required by Water Code, sec.49.191; 

(5) an annual audit report, financial report, or financial
dormancy affidavit, as required by sec.293.94 (c), (e), and (f) of this
title (relating to Annual financial Reporting Requirements); and 

(6) an annual filing affidavit, as required by subsection
(g) of sec.293.94 of this title (relating to Annual financial Reporting
Requirements), and Water Code, sec.49.194(d), certifying that all filings
of copies of the annual audit report, an annual financial dormancy affidavit,
or annual financial report, as applicable, have been completed. 

(b) (No change.)

sec.293.92. Additional Reports and Information Required
of Certain Districts.
A district which is providing or proposing to provide, as the district's
principal function, water, wastewater, drainage, and flood control or protection
facilities or services, or any of these facilities or services that have
been financed or are proposed to be financed with bonds of the district payable
in whole or in part from taxes of the district, or by imposition of a standby
fee to household or commercial users, other than agricultural or irrigation
users, and which district includes less than all the territory in at least
one county and which, if located within the corporate area of a city, includes
less than 75 percent of the incorporated area of the city or which is located
outside the corporate area of a city in whole or in substantial part shall
submit such additional reports and information as may be required by the
executive director from time to time. 

(1) The information shall include: 

(A)-(C) (No change.) 

(D) The total amount of bonds which have been approved by
the voters and which may be issued by the district (excluding refunding bonds
and any bonds or portion of bonds payable solely from revenues received or
expected to be received pursuant to a contract with a governmental entity);
(E) the aggregate initial principal amount of all bonds of
the district payable in whole or in part from taxes (excluding refunding
bonds and any bonds or portion of bonds payable solely from revenues received
or expected to be received pursuant to a contract with a governmental entity)
which have been previously issued and remain outstanding; 

(F) whether a standby fee is imposed by the district, and,
if so, the amount of the standby fee; 

(G)-(H) (No change.) 

(I) the particular form of Notice to Purchasers required by
Water Code, sec.49.452 to be furnished by a seller to a purchaser of real
property in that district completed by the district with all information
required to be furnished by the district; and 

(J) (No change.) 

(K) If a district has not yet levied taxes, a statement to
such effect together with the district's projected rate of debt service tax
estimated at the time of creation of the district shall be substituted for
subparagraphs (C) and (D) of this paragraph. 

(i)-(iv) (No change.) 

(v) If a district fails to submit the information required
by this section in the time required, the executive director may request
the attorney general, or the district or county attorney of the county in
which the district is located, to seek a writ of mandamus to force the governing
board of the district to prepare and submit the necessary information. 
(vi) (No change.)

sec.293.93. Special Reporting Requirements for Districts
Subject to Consent Agreements Made Pursuant to the Texas Water Code, 
sec.54.016(h). 
Districts created subject to the consent agreements authorized by the
Texas Water Code, sec.54.016(h), shall submit the duly affirmed and acknowledged
statement, and the map or plat, required by Water Code, sec.54.016(h)(4)(B),
together with the reports and information required by Water 
Code,sec.sec.49.455(c)-49.455(j),
as incorporated by reference into Water Code, sec.54.016(h)(4)(B). 

sec.293.94. Annual Financial Reporting Requirements. 
(a) Statutory provisions for fiscal accountability. All districts
as defined in Water Code, sec.49.001(a) are required to comply with the
provisions of Water Code, sec.49.191-49.198 requiring every district to
either have performed an annual audit or to submit an annual financial dormancy
affidavit or an annual financial report. 

(b) Accounting and auditing manuals. All districts shall comply
with the accounting and auditing manuals adopted by the executive director.
The manuals shall consist of two publications, "Water District Accounting
Manual" and "Annual Audit Report Requirements". The manuals may be revised
as necessary by the executive director. 

(c) Duty to audit. The governing board of each district created
under the general law or by special act of the legislature shall have the
district's fiscal accounts and records audited annually at the expense of
the district. The person who performs the audit shall be a certified public
accountant or public accountant holding a permit from the Texas State Board
of Public Accountancy. Districts with limited or no financial activity may
qualify to prepare an unaudited financial report, pursuant to subsection
(e) of this section, or a financial dormancy affidavit, pursuant to subsection
(f) of this section. 

(d) Form of audit. The audit shall be performed according to
generally accepted auditing standards adopted by the American Institute of
Certified Public Accountants. Financial statements shall be prepared in 
accordance
with generally accepted accounting principles as adopted by the American
Institute of Certified Public Accountants. 

(e) Audit report exemption. 

(1) A district that is not collecting taxes may elect to submit
annual financial reports to the executive director in lieu of the district's
compliance with Water Code, sec.49.191 provided: 

(A) the district had no bonds or other long-term (more than
one year) liabilities outstanding during the fiscal period; 

(B) the district did not have gross receipts from operations,
loans, or contributions in excess of $100,000 during the fiscal period; and
(C) the district's cash and temporary investments were not
in excess of $100,000 at any time during the fiscal period. 

(2) The annual financial report must be accompanied
by an affidavit, attesting to the accuracy and authenticity of the financial
report, signed by a duly authorized representative of the district, which
conforms with the format prescribed by the executive director. Financial
report and filing affidavit forms may be obtained from the executive director.
(3) Districts governed by this section are subject to
periodic audits by the executive director. 

(f) Financially dormant districts. 

(1) (No change.) 

(2) The required financial dormancy and filing affidavit
shall be prepared in a format prescribed by the executive director and shall
be submitted by a duly authorized representative of the district. Financial
dormancy affidavit forms may be obtained from the executive director. 

(3) Districts governed by this section are subject to
periodic audits by the executive director. 

(g) Annual filing affidavit. Each district shall submit annually
with the executive director a filing affidavit which affirms that copies
of the district's audit report, financial report, or financial dormancy 
affidavit
have been filed within the district's business office. Each district that
files a financial report or a financial dormancy affidavit will find that
the annual filing affidavit has been incorporated within those documents,
so a separate filing affidavit form is not necessary. However, each district
that submits an audit report must execute and submit, together with the audit,
an annual filing affidavit when the audit is submitted with the executive
director. Annual filing affidavits must conform to the format prescribed
by the executive director. Filing affidavit forms may be obtained from the
executive director. 

(h) Submitting of audits, financial reports, and affidavits.
(1) Submittal dates. 

(A) Audits. Audit reports and the annual filing affidavits
that must accompany those reports shall be submitted as prescribed by paragraph
(2) of this subsection within 135 days after the close of the district's
fiscal year. The district's governing board shall approve the audit before
a copy of the report is submitted to the executive director; however, the
governing board's refusal to approve the audit shall not extend the submittal
deadline for the audit report. If the governing board refuses to approve
the audit, the board shall submit to the executive director by the prescribed
submittal date the report and a statement providing the reasons for the board's
refusal to approve the report. 

(B) Financial reports. Financial reports and the annual filing
affidavits in a format prescribed by the executive director, must be submitted
to the executive director as prescribed by paragraph (2) of this subsection
within 45 days after the close of the district's fiscal year. 

(C) (No change.) 

(2) Submittal locations. Copies of the audit, financial
report, or financial dormancy affidavit described in subsections (c), (e)
and (f) of this section shall be submittal annually to the executive director,
and within the district's office. 

(i) Review by executive director. 

(1) The executive director may review the audit report of each
district, and if the executive director has any objections or determines
any violations of generally accepted auditing standards or accounting 
principles,
statutes or commission rules, or if the executive director has any 
recommendations,
he shall notify the governing board of the district. 

(2)-(3) (No change.) 

(j) Penalties for Noncompliance. 

(1) (No change.) 

(2) A district that fails to comply with the filing provisions
of Texas Water Code, Chapter 49, may be subject to a civil penalty of up
to $100 per day for each day the district wilfully continues to violate these
provisions after receipt of written notice of violation from the executive
director by certified mail, return receipt requested. The state may sue to
recover the penalty.

sec.293.96. Miscellaneous Reports To Be Submitted
to the Executive Director.
(a) (No change.) 

(b) Certified copy of water and wastewater rate order adopted
by the board and any amendments thereto, shall be submitted within 30 days
of adoption. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614287
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

District Name Changes and Posting Signs 
30 TAC sec.sec.293.101-293.103
The amendment and new sections are adopted under the Texas
Water Code, sec.5.103 and sec.5.105, which provide the Texas Natural
Resource Conservation Commission with the authority to adopt any sections
necessary to carry out its powers and duties under the Texas Water Code and
other laws of the State of Texas, and to establish and approve all general
policy of the commission. 

sec.293.102. District Name Change.
(a) A district may apply to the commission for approval of
a name change. 

(1) The district must have reasonable grounds for requesting
the change. 

(2) The new name must be generally descriptive of the
location of the district followed by the type of district as provided by
the title of the chapter of the Texas Water Code concerning the district.
If a district is located wholly within one county that contains more than
one district of that type, the district may be differentiated, if necessary
by adding to the new name the proper consecutive number. The new name may
not be the same as the name of any other district. 

(b) Applications requesting approval of a name change shall
include the following: 

(1) A resolution by the governing board requesting commission
approval of the name change which indicates the proposed new name; 

(2) The reason for the requested change; 

(3) A $100 application fee; 

(4) Any other information that the executive director
may require. 

(c) District action following commission approval of the name
change. 

(1) Within 30 days of the date of commission approval, the
district shall publish notice of the name change in a newspaper or newspapers
of general circulation in the county or counties in which the district is
located. 

(2) Within 30 days of the date of commission approval,
the district shall give notice of the name change by mail to utility customers,
permittees, if any, and the county clerk of all counties in which a portion
of the district lies; and, to the extent practicable, to the holders of bonds,
obligations, and other indebtedness of the district. 

(3) A suggested form of notice is given in sec.293.103
of this title (relating to Form of Notice for Name Change). 

(4) If applicable, the district shall post new name signs
pursuant to sec.293.101 of this title (relating to Posting Signs in the
District).

This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.

Issued in Austin, Texas, on September 30, 1996.
TRD-9614288
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Water and Wastewater System Rules and Regulations 
30 TAC sec.293.111
The amendment is adopted under the Texas Water Code, sec.5.103
and sec.5.105, which provides the Texas Natural Resource Conservation Commission
with the authority to adopt any regulations necessary to carry out its powers
and duties under the Texas Water Code and other laws of the State of Texas,
and to establish and approve all general policy of the commission. 

sec.293.111. Water and Wastewater Service Lines and
Connection.
(a) All water districts which provide or propose to provide
water and wastewater service shall: 

(1) adopt regulations governing the construction of commercial
and/or household service lines and connections to the district's water and
wastewater system; 

(2) complete and have operable water and wastewater lines
and a treatment plant before any connections are authorized; 

(3) (No change.) 

(4) require that the district's inspector certify in writing
that the connection was installed in accordance with accepted construction
practices and in compliance with the district's regulations governing this
type of work; 

(5) (No change.) 

(6) upon submission of each bond application, document
to the executive director that a water and wastewater service connection
inspection program is in force for all new connections and that certification
by the district's inspector of compliance with district rules is on file
in the district's records; 

(b) Suggested regulations for wastewater systems may be obtained
from the executive director upon request. Strict enforcement of such regulations
will eliminate infiltration/inflow problems in service lines, sewage treatment
plant overload and, as a result, reduce operation and maintenance costs.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614289
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Fire Department Projects 
30 TAC sec.sec.293.121, 293.123, 293.124
The amendments are adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the State of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission. 
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614290
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Dissolution of Districts 
30 TAC sec.sec.293.131, 293.132, 293.134
The amendments are adopted under Texas Water Code sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Water Code and other laws of the State of Texas, to
establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
sec.293.131. Authorization for Dissolution of Water
District by the Commission.
(a) Chapters 36 and 49, subchapters I and K, being the Texas
Water Code, sec.sec.36.301-36.307 and 49.321-49.327 authorize the commission
to dissolve any district as defined in Water Code, sec.49.001(1) which
is inactive for a period of three consecutive years for a groundwater 
conservation
district or five consecutive years for other water districts and has no 
outstanding
bonded indebtedness. A groundwater conservation district that is composed
of territory entirely within one county may be dissolved even if it has 
outstanding
indebtedness that matures after the year in which the district is dissolved.
(b) (No change.) 

(c) The application must include a petition on the part of
the party requesting dissolution including a statement of the reasons that
a dissolution is desirable or necessary, and contain a statement that the
district has been financially dormant for the preceding three-year period
for a groundwater conservation district or the preceding five-year period
for other water districts and has performed no functions for the five previous
preceding years and has no outstanding bonded indebtedness. A groundwater
conservation district that is composed of territory entirely within one county
may be dissolved even if it has outstanding indebtedness that matures after
the year in which the district is dissolved. 

(d) If the petition is submitted by a landowner, a director
of the district, or other interested party, the application must contain
certified copies of dormancy affidavits submitted pursuant to Water Code,
sec.49.197, for three years for a groundwater conservation district or
five years for other water districts preceding the year in which the application
is submitted.  

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

(g) The executive director may initiate procedures to dissolve
a district without financial dormancy affidavits on file if: 

(1) The district has failed to comply with the reporting requirements
of this chapter for the previous five year period; 

(2) attempts to contact directors, interested parties
or anyone with knowledge of district's financial activity have failed; and,
(3) the state comptroller of public accounts has submitted
a certificate certifying that the district has never registered any bonds
with the comptroller. 

sec.293.132. Notice of Hearing.
A notice of the hearing upon the proposed dissolution of a district
will be given by the chief clerk and will describe the reasons for the 
proceeding,
as required by Water Code, sec.36.302 for groundwater conservation districts
and sec.49.322 for other water districts. The notice will be published
once each week for two consecutive weeks before the day of hearing in a 
newspaper
having general circulation in the county or counties in which the district
is located. The first publication will be 30 days before the day of the hearing.
Notice of the hearing will be given by the chief clerk by first class mail
addressed to the directors of the district according to the last record on
file with the executive director.

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614291
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Application for Approval of Standby Fees 
30 TAC sec.sec.293.141, 293.142, 293.143, 293.145, 293.146, 293.148-293.150 
The sections are adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provides the Texas Natural Resource Conservation
Commission with the authority to adopt any sections necessary to carry out
its powers and duties under the Texas Water Code and other laws of the State
of Texas, to establish and approve all general policies of the commission,
and to collect statutory fees from persons submitting various applications
to the commission. 

sec.293.141. Standby Fees.
(a) Districts, as defined by Water Code, sec.49.001, which
provide or propose to provide retail potable water, wastewater, or drainage
services may, with commission approval, adopt and levy standby fees. 

(b) Standby fee, as authorized by Water Code, sec.49.231,
means a charge, other than a tax, imposed on undeveloped property for the
availability of water, wastewater, or drainage facilities and services. Standby
fee does not mean an impact fee, tap fee, or a connection fee. 

(c) Undeveloped property means a tract, lot or reserve in the
district to which no vertical improvements and water or wastewater connections
or drainage services have been made to serve the property utilizing 
substantially
the full amount of the capacity allocated to the property as shown in the
district's land development plan submitted with creation applications, bond
applications, (including supporting documents) or by written commitment and
for which: 

(1) any portion of water, wastewater, or drainage facilities
and services are available; 

(2) water supply or wastewater treatment plant capacity
or drainage capacity sufficient to serve any portion of the property is 
available;
or 

(3) major water supply lines or wastewater collection
lines or major drainage outfall facilities with capacity sufficient to serve
any portion of the property are available. 

(d) A district may not impose a debt service standby fee unless
the facilities and services available to the property were financed by the
district; however, a district may impose a standby fee for operating and
maintaining facilities that it has not financed. 

(e) Standby fees levied under this section may be used for
the purpose of paying the following costs: 

(1) operation and maintenance costs associated with maintaining
the facilities; and/or 

(2) debt service payments for water wastewater, or drainage
facilities. 

(f) Commission approval and adoption of standby fees is valid
for a period of not more than three successive years. A district may charge
a standby fee of an amount not to exceed the maximum amount approved by the
commission. A district may submit an application to increase or renew its
standby fee at any time. 

(g) It is not required that standby fees be uniform throughout
the district, only that the fees fairly allocate the cost of district water,
wastewater, and drainage facilities and service among property owners of
the district. The standby fee may be a single fee expressed as a unit cost
per single family equivalent connection or the fee per single family equivalent
unit may be divided into separate components (tiers) such as water distribution
facilities, water supply facilities, wastewater collection facilities, 
wastewater
treatment facilities, internal drainage facilities, or outfall drainage 
facilities.
(h) Standby fees as approved by the commission may be collected
for monthly, quarterly or annual billing periods, but may not be imposed
retroactively or in arrears beyond January 1 of the calendar year in which
such standby fees are adopted unless authorized by the commission. A district
may not require payment of standby fees in advance of a current billing period.
(i) To the extent that standby fees are imposed and collected
in contravention of applicable rules or order(s) of the commission, the 
commission
may require that such improperly collected fees be refunded, together with
interest thereon. 

sec.293.142. Application Requirements for Imposition
of Standby Fees To Be Used to Supplement the Debt Service Account.
(a) Only those districts which meet the following criteria
may seek approval from the commission to use standby fee revenues to supplement
the debt service account: 

(1) the district's combined tax rate as defined under sec.293.59(f)
of this title (relating to Economic Feasibility of Projects) and calculated
as described in subsection (c) (1) of this section, excepting standby fees
and developer contribution, over the period over which standby fees are to
be levied exceeds those limits defined under sec.293.59(k)(3) of this title,
for the county in which the district is situated. Any increases in assessed
valuation used in calculating the combined projected tax rate shall be based
on historical growth rates experienced in the district; and 

(2) (No change.) 

(b) (No change.) 

(c) Standby fee amounts shall be determined so that: 

(1) the resultant combined projected tax rate as defined under
sec.293.59(f) of this title is not less than those limits defined under
sec.293.59 (k)(3) of this title when calculated based on: 

(A)-(D) (No change.) 

(2) the total taxes and standby fee assessment for
debt service for water, wastewater, and drainage facilities against undeveloped
property does not exceed the amount of district taxes levied for water, 
wastewater,
and drainage facilities against a comparable lot or tract with completed
improvements. In the absence of a comparable lot or tract with completed
improvements, the projected value of the lot or tract with completed 
improvements
as contained in the district's bond application(s) shall be used; and 

(3) (No change.) 

(d) Applications shall include the following items. 

(1) (No change.) 

(2) a certified copy of a board resolution which shall
contain a request for commission approval of the fee and shall state the
designated fund to which standby fee revenues will be applied, the amount
of the fee, the three years for which the fee is proposed for levy, and the
projected debt service and operations and maintenance tax rates the district
expects to achieve through the levy of the standby fee; 

(3) a map of the district (not larger than 24 inches by
36 inches) which shall clearly designate the properties against which the
proposed standby fee will be levied. If such information cannot be located
in agency files, the executive director may require that water, wastewater,
and drainage facilities serving those properties and financed by the district
be identified. An accounting of district-financed water supply, wastewater
treatment facilities, and drainage facilities and capacity available in those
facilities may also be required; 

(4) a copy of the most recent tax appraisal roll by the
Central Appraisal District accompanied by a table prepared by the district
which delineates the district's assessed valuation. The table should list
each component of the district's assessed valuation attributable to raw acreage
and acreage with and without vertical improvements. The component attributable
to acreage with vertical improvements should be further divided into single
family residential sections according to similar home value, multi-family
sections, commercial sections, industrial sections, and any other type of
vertical development existing within the district; 

(5) a table which compares the cumulative buildout for
the current fiscal year to the cumulative buildout for the same fiscal year
projected at the time of the bond issue. Indicate according to section, the
number of lots, homes, commercial and industrial development, etc., and raw
acreage within the district; 

(6) A list by source of the following tax rates: 

(A) the combined tax rate projected at the time of the most
recent bond issue; 

(B) the actual combined tax rate set for the current fiscal
year; and 

(C) the combined tax rate projected over the period during
which the standby fee will be levied. Any increases in assessed valuation
for this calculation should be based on the district's historical growth
rate.  

(7) a debt service schedule for all bonds outstanding.
(8) a cash flow table based on the reduced combined projected
tax rate the district expects to achieve through the standby fee levy. 
Distinguish
between debt service revenues obtained from taxes and other sources of debt
service revenues. List as a separate column the additional revenues required
to produce the reduced debt service tax rate. Any increases in assessed 
valuation
shown on this table should be based on the historical buildout rate experienced
in the district. If the district's assessed valuation has been declining,
show the assessed valuation as fixed at the current value. The district shall
use the latest certified assessed value or estimated assessed valuation provided
by the central appraisal district. 

(9) a comparison of the actual versus the approved cost
summary from the district's most recent bond issue with separate costs shown
for water, wastewater and drainage projects. 

(10) any other information as the executive director may
require to assure that the fees are consistent with the criteria contained
herein. 

(11) in the event that a district provides the executive
director with a written consent of all landowners of undeveloped property
in the district identified on the district's tax rolls and of all mortgagees
of undeveloped property who have submitted a written request to be informed
of any hearing pursuant to sec.293.145 of this title (relating to Public
Hearing and Notice Requirements), to the proposed levy of standby fees, the
district shall be exempted from the requirements of paragraphs (4), and (5)
of this subsection except that the district shall provide a copy of the most
recent tax appraisal roll by the central appraisal district.

sec.293.143. Application Requirements for Standby
Fees to be Used to Supplement the Operation and Maintenance Fund.
(a) In calculating standby fees to be used to supplement the
operation and maintenance fund, the following definitions apply. 

(1) (No change.) 

(2) Active connection, as used in this section, means
a lot or tract with vertical improvements and a meter in service for which
water and/or wastewater usage is billed. 

(3) Inactive connection, as used in this section, means
a lot or tract with existing vertical improvements, and where water and/or
wastewater connections were made but such service is not being provided nor
billed. 

(4) Undeveloped property (expressed in terms of connections),
as used in this section, means a tract, lot or reserve in the district to
which no water or wastewater connections or drainage services exist and for
which: 

(A) water, wastewater, or drainage facilities and services
are available; 

(B) water supply, wastewater treatment plant capacity, or
drainage capacity sufficient to serve any portion of the property is available;
or 

(C) major water supply lines, wastewater collection lines,
or drainage facilities with capacity sufficient to serve any portion of the
property are available. 

(b) Only those districts which meet the following criteria
may seek approval from the commission to use standby fee revenue to supplement
the operation and maintenance fund: 

(1) all capitalized funds or reserves for operating purposes
which were derived from all prior bond issues (except an amount not to exceed
a three-month reserve) have been depleted or are projected to be depleted
within the three years in which the standby fees are to be levied; and 
(2) the operation and maintenance fund is operating at
a deficit or is projected to operate at a deficit within the three years
in which the standby fees are to be levied with: 

(A) rates for the first 10,000 gallons of water and wastewater
usage for residential users (or equal or greater amounts for other users)
which exceed $30.00; or 

(B) rates for the first 10,000 gallons of usage for residential
users (or equal or greater amounts for other users) which exceed $22.00 if
the district is a provider of only water or wastewater service. 

(c) In determining the revenue to be generated from water and
wastewater rates if such rates do not equal or exceed the rates stated in
subsection (b)(2) of this section, an amount will be added to the minimum
charge such that the total bill for 10,000 gallons of usage will equal the
rates stated in subsection (b)(2) of this section. 

(d) Standby fee amounts shall be determined so that all of
the following are true: 

(1) The total revenue projected to be generated from the fee
is not more than that necessary to balance the projected operation and 
maintenance
budget assuming: 

(A) a 90 % collection rate of the proposed fee; 

(B) maintenance tax revenue based on a 90 % collection rate
is applied toward the budget; 

(C) all of the water, wastewater, or drainage revenue projected
for the coming year is applied toward the budget, with rates or revenues
established or assumed at an amount equal to or higher than those in the
preceding subsection (b)(2) of this section; and 

(D) an operating reserve not to exceed three months included
in the first year's budget if that reserve is not already existing. 

(2) The fee amount shall not exceed the rate charged
to active connections for 10,000 gallons actual water and wastewater usage;
(3) The fee amount equitably distributes the fixed costs
of operating and maintaining the district's water, wastewater, or drainage
facilities among active connections, inactive connections, and undeveloped
property owners. In the absence of an allocation of a district's budget to
fixed and variable expenses in an application, the staff shall make its own
determination based on a predetermined fixed and variable allocation, a copy
of which shall be made available from the executive director. A district
may submit, with supporting and substantiating documentation, an allocation
specific to that district. 

(e) In determining whether a district which meets the foregoing
requirements be allowed to impose standby fees for operation and maintenance
revenue and the amount of the standby fee levy against the various categories
of development authorized to be imposed, the following factors may be 
considered:
(1) (No change.) 

(2) the amounts charged or proposed to be charged for
water and/or wastewater services usage; 

(3) (No change.) 

(4) the capacity of the various components of the system;
(5) (No change.) 

(6) the amounts charged by districts with comparable land
uses; 

(7) (No change.) 

(f) Applications shall include the following: 

(1) an application fee of $100; 

(2) a certified copy of a board resolution which shall
contain a request for commission approval of the fee and shall state the
designated fund to which standby fee revenues will be applied, the amount
of the fee and the intervals or periods of billing for such standby fees
(either monthly, quarterly or annually); 

(3) a proposal for the standby fee amount including substantiating
calculations to show how the standby fee was derived; 

(4) a map of the district (not larger than 24 inches by
36 inches) which shall clearly designate the properties against which the
proposed standby fee will be levied. If such information is not available
within agency files, the executive director may require that water, wastewater,
or drainage facilities serving those properties be identified. An accounting
of water supply, wastewater treatment facilities, or drainage facilities
and capacity available in those facilities may also be required. 

(5) a table indicating the ultimate number of connections
according to section for which the district has water, wastewater, or drainage
facilities. Indicate active connections, inactive connections, and the number
of connections attributable to undeveloped property; 

(6) a copy of the district's operating budget for the
past two years and the proposed budget for the coming year. Indicate those
fixed costs required to operate and maintain the water, wastewater, or drainage
facilities, including a proportionate share of consultant and organizational
fees attributable to operating and maintaining the water, wastewater, or
drainage facilities and those expenses not related to operating and maintaining
the district's water, wastewater, or drainage facilities, such as operating
a recreational facility; 

(7) an indication of revenues available for operation
and maintenance costs and the sources of those revenues. Include water 
consumption
records, wastewater flow records, or drainage maintenance records (if used
in determining charge for service) for the previous two years and projected
for the coming year as reflected in the proposed budget; 

(8) a certified copy of the district's most current order
establishing the water and/or wastewater rates or drainage charges, as 
applicable;
(9) any other information as the executive director may
require to assure that the fees are consistent with the criteria contained
herein. 

(10) in the event that a district provides the executive
director with written consent of all landowners of undeveloped property in
the district identified on the district's tax rolls and of all mortgagees
of undeveloped property who have submitted a written request to be informed
of any hearing pursuant to sec.293.145 of this title (relating to Public
Hearing and Notice Requirements), to the proposed levy of standby fees, the
district shall be exempted from the requirements of paragraphs (3), (5) and
(6) of this subsection except that the district shall provide a copy of the
district's operating budget for the past two years and the coming year.

sec.293.145. Public Hearing and Notice Requirements. 
(a) The chief clerk shall schedule a hearing date on its uncontested
agenda and advise the district of the scheduled time and date of the hearing.
If the item is contested, the commission may remand the item for an evidentiary
hearing. 

(b) The district shall publish notice of the hearing in a form
provided by the chief clerk of the commission. Notice of the hearing shall
be published in a newspaper of general circulation in the county or counties
in which the district is located once a week for two consecutive weeks. The
first publication must occur not later than the 30th day before the date
of the hearing. 

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

sec.293.146. District Actions Following Approval
of a Standby Fee.
(a) (No change.) 

(b) The governing board of the district shall, within seven
days from the date of the district's order adopting the standby fees, submit
to the executive director and file with the county clerk of each county in
which a portion of the district lies an update of the information required
by Water Code, sec.49.452. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614274
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

30 TAC sec.sec.293.149-293.152
The repeals are adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614292
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Petition for Approval of Impact Fees 
30 TAC sec.sec.293.171-293.173
The amendments are adopted under the Texas Water Code, (Vernon
1992), sec.sec.5.103, 5.105, and 5.235, which provide the Texas Natural
Resource Conservation Commission with the authority to adopt any rules necessary
to carry out the powers and duties under the provisions of the Texas Water
Code and other laws of this state, to establish and approve all general policy
of the commission, and to collect statutory fees from persons submitting
various applications to the commission. 

sec.293.172. Information Required to Accompany Applications
for Approval of Impact Fees.
Pursuant to the Local Government Code, sec.395.080, a district proposing
to assess impact fees shall submit to the executive director an application
for review. Upon submission of an application for review, the executive director
has the responsibility for reviewing and the commission has the responsibility
for approving or denying impact fee requests by all districts created pursuant
to Article III, Section 52, or Article XVI, Section 59, of the Texas 
Constitution.
Each application submitted shall contain the following: 

(1)-(4) (No change.) 

(5) A table establishing the additional demand required
by the new connections, including the level of consumption represented by
a connection for each category of capital improvements. Justification must
be provided if the consumption levels differ from the minimum design criteria
established by the commission. 

(6)-(8) (No change.)

sec.293.173. Impact Fee Notice Actions and Requirements. 
(a) The chief clerk shall set the petition for hearing, and
issue notice thereof. 

(b) The notice of the hearing must be published by the district
once in a newspaper with general circulation in each county in which the
district intends to levy an impact fee. The notice shall be of sufficient
size to be easily legible and appear at least 30 days before the scheduled
date of the hearing. An affidavit verifying publication of the notice must
be filed with the chief clerk prior to the date of the hearing. 

(c) (No change.) 

(d) The district shall send, not later than the 30th day before
the date of the hearing, notice of the hearing to each owner of property
within the service area, as of the date of submitting the application to
the executive director, unless good cause is shown why such notice should
not be given. Property ownership shall be as reflected by the county tax
rolls or the records of the appraisal district for the county, whichever
is more current. The district shall file an affidavit certifying compliance
with the requirements of this subsection to the chief clerk at least one
week prior to the commission hearing. Ownership of the property shall be
certified by the county tax assessor/collector from the county tax rolls
or by the appraisal district for the county, as applicable, as of the date
of submitting of the application to the commission. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614293
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

30 TAC sec.293.177
The repeal is adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614294
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Appeal of Decision Regarding Facilities Constructed for a Municipal Utility
District 
30 TAC sec.293.180
The amendment is adopted under the Texas Water Code, (Vernon
1992), sec.sec.5.103, 5.105, and 5.235, which provide the Texas Natural
Resource Conservation Commission with the authority to adopt any rules necessary
to carry out the powers and duties under the provisions of the Texas Water
Code and other laws of this state, to establish and approve all general policy
of the commission, and to collect statutory fees from persons submitting
various applications to the commission.

sec.293.180. Appeal of a Decision of the Board of
Municipal Utility District Regarding Facilities Constructed for the District. 
(a) (No change.) 

(b) Notice Actions and Requirements. 

(1) The chief clerk of the commission shall set the petition
for hearing, and issue notice thereof. 

(2) The district shall issue notice by sending, not later
than the 30th day before the date of the hearing, notice of the hearing to
each owner of property within the district, as of the date of submitting
the application with the executive director, unless good cause is shown why
such notice should not be given. Property ownership shall be as reflected
by the county tax rolls or the records of the appraisal district for the
county, whichever is more current. The district shall file an affidavit 
certifying
compliance with the requirements of this subsection at least one week prior
to the commission hearing. Ownership of the property shall be certified by
the county tax assessor/collector from the county tax rolls or by the appraisal
district for the county, as applicable, as of the date of submitting the
application to the executive director. 

(c) (No change.) 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614295
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Acquisition of Road Utility District Powers by Municipal Utility Districts
30 TAC sec.293.201, sec.293.202
The amendments are adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission. 
sec.293.202. Application Requirements for Commission
Approval.
A conservation and reclamation district, operating pursuant to the
Texas Water Code, Chapter 54, and which has the power to levy taxes, shall
submit to the executive director of the Texas Natural Resource Conservation
Commission an application which shall include the following documents, prior
to petitioning the Texas Department of Transportation or road utility district
powers: 

(1) (No change.) 

(2) a certified copy of the resolution of the governing
board of the district authorizing the request for approval of the Texas Natural
Resource Conservation Commission to petition the Texas Department of 
Transportation
for road utility district powers; 

(3)-(4) (No change.) 

(5) a certified copy of the latest audit of the district
performed pursuant to Water Code, sec.sec.49.191-49.194; 

(6) for districts which have not submitted an annual audit,
a financial statement of the district, including a detailed itemization of
all assets and liabilities showing all balances in effect not later than
30 days before the date the district submits its request for approval with
the executive director; 

(7) a certified copy of preliminary plans for all the
facilities to be constructed, acquired, or improved by the district, which
the district is required to submit to the governmental entity to which it
proposes to convey district facilities by Texas Transportation Code, 
sec.441.013;
(8)-(9) (No change.) 

(10) any other information which may be required by the
executive director; and 

(11) (No change.)

This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.

Issued in Austin, Texas, on September 30, 1996.
TRD-9614296
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Procedures and Design Criteria for Approval of Water System Projects 
30 TAC sec.293.301-293.311
The repeals are adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614275
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Procedures and Design Criteria for Approval of Wastewater System Projects
30 TAC sec.293.331
The repeal is adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission. 
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614297
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Abbreviated Review of Water and Wastewater Line Projects 
30 TAC sec.293.341
The repeal is adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission. 
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614353
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Filing of Plans and Specifications with Commission Offices 
30 TAC sec.293.343
The repeal is adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614276
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

Special Actions Relating to the Harris-Galveston Coastal Subsidence District
30 TAC sec.sec.293.361-293.365
The amendments are adopted under the Texas Water Code, sec.sec.5.103,
5.105, and 5.235, which provide the Texas Natural Resource Conservation 
Commission
with the authority to adopt any sections necessary to carry out its powers
and duties under the Texas Water Code and other laws of the state of Texas,
to establish and approve all general policy of the commission, and to collect
statutory fees from persons submitting various applications to the commission.
sec.293.361. Definitions.
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates otherwise. 
sec.293.362. Request to Monitor Delivered Water. 
(a) Upon the submittal of a written request pursuant to Water
Code, sec.151.129, to the executive director by a person ordered by the
board to completely or partially discontinue the use of groundwater, the
executive director shall monitor the water delivered to the person from the
alternative water supply as defined in Water Code, sec.151.129(f) to determine
the percentage of that water supply that is surface water and the percentage
that is groundwater. The request for monitoring must be submitted, together
with the following information, to the executive director no later than six
months prior to the end of the permit year immediately following the board's
order. The submittal of an administratively complete request will entitle
the person to monitoring not during that permit year, but during the first
succeeding permit year, subject to the provisions of subsection (b) of this
section. For purposes of Water Code, sec.151.129, a person shall be deemed
to have been ordered to completely or partially discontinue the use of 
groundwater
the board issues a permit that results in the person's use of surface water
as an alternative water supply. For purposes of Water Code, sec.151.129,
the request for monitoring shall be deemed made as of the first day of the
permit year following the timely receipt by the executive director of an
administratively complete request subject, however, to the provisions of
subsection (b) of this section. The following information shall be provided
to the executive director with the request for monitoring: 

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

(b)-(c) (No change.) 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614352
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Effective date: October 22, 1996

Proposal publication date: April 5, 1996

For further information, please call: (512) 239-4640

TITLE 31. NATURAL RESOURCES AND CONSERVATION
PART I. General Land Office
CHAPTER 16.Coastal Protection
31 TAC sec.16.4
The General Land Office (GLO), with the approval of the School
Land Board (SLB) granted at its January 16, 1996 and October 1, 1996 meetings,
adopts amendments to sec.16.4, concerning thresholds for referral for specific
activities in coastal natural resource areas (CNRAs). The amendments are
being adopted with changes to the proposed text as published in the June
14, 1996, issue of the Texas Register (21
TexReg 5429). 

The section identifies thresholds for certain GLO and SLB actions that
may adversely affect wetlands and other critical areas along the Texas coast.
Actions that exceed the threshold may be referred to the Coastal Coordination
Council (council) for consistency review. The section is being amended to
provide uniformity between GLO\SLB and Texas Natural Resources Conservation
Commission (TNRCC) thresholds, to change the threshold for seismic permits
from one based on area to one based on size and depth of charge, and to 
consolidate
into one threshold the thresholds for miscellaneous easements. 

Pursuant to sec.33.204(a) of the Coastal Coordination Act (Texas Natural
Resources Code, Chapter 33, Subchapter F, sec.sec.33.201-33.208), the
council promulgated rules adopting Coastal Management Program (CMP) goals
and policies, Part XVI of this title (relating to Coastal Coordination Council).
Chapter 16 (relating to Coastal Protection) was adopted by the GLO and the
SLB as required by the rules of the council as set out in Part XVI of this
title (relating to Coastal Coordination Council), which Part XVI had been
revised to reflect House Bill 3226, enacted during the 74th Legislature,
1995, which amended the Coastal Coordination Act.

One of the council's stated CMP goals is that, when an agency proposes
a listed action that may adversely affect a CNRA, the action comply with
the CMP goals and policies. The CMP describes a process by which the agency
can, in the first instance, determine whether its own action is consistent
with the CMP. Pursuant to sec.505.10(a)(2) of this title (relating to Purpose
and Policy), the council made a policy decision to solicit and ensure adequate
review at the agency level. Only those actions that present unique or 
significant
consistency issues are expected to be reviewed by the council. As a result,
the council anticipates reviewing fewer agency actions than if it were not
requiring agencies to monitor their own actions for consistency with CMP
goals and policies. To implement that policy, an agency may develop thresholds
relating to agency actions that otherwise could be referred to the council
for review. Agency actions falling below a threshold may only be referred
for consistency review under certain limited circumstances described in 
sec.505.32(b)(1)(B)
of this title (relating to Requirements for Referral of a Proposed Agency
Action). 

At its June 29, 1995, meeting, the council directed that a task force be
established to resolve disparities between the various thresholds for review
that had been proposed by various state agencies with overlapping authority
or jurisdiction. 

Chapter 16 was adopted and published in the October 20, 1995, issue of
the Texas Register (20 TexReg 8643). When
sec.16.4 was first adopted, the GLO and the TNRCC were working together
to coordinate thresholds where the agencies have overlapping authority. That
effort was not completed by the time sec.16.4 was adopted. At the time,
no modification of GLO/SLB thresholds was anticipated, and the thresholds
were adopted for real estate activities without change to those thresholds
as proposed. That coordination effort has now been completed, and the amendment
to paragraph 16.4(b)(2) is adopted to provide uniformity between GLO\SLB
and TNRCC thresholds, by setting the thresholds for real estate activities
at one acre for all critical areas except oyster reefs. 

When sec.16.4 was first adopted, threshold limits for seismic activities
governed by a geophysical permit were based on certain assumptions related
to the size of typical seismic activities in submerged areas and in upland
and shallow submerged areas. 

Paragraph 16.4(c)(2) is amended to change the threshold for seismic 
(geophysical)
permits from a series of figures based on acreage to a threshold based on
the size and depth of explosives used pursuant to the permit. The rule as
amended defines as in excess of the threshold for review any geophysical
permit authorizing (i) for upland areas, a shot in excess of 40 pounds of
dynamite equivalent, and (ii) for submerged areas, either a shot in excess
of 20 pounds of dynamite equivalent or a shot hole drilled shallower than
120 feet below the mud line. A threshold based on charge size and hole depth
is more functional because the size of the charge detonated and the depth
of the drilled hole in which the charge is placed are more commonly used
measures of the level of natural resource impact from geophysical activity.
Further, the GLO's oil and gas rules in subparagraphs (e)(1)(E) and (e)(2)(E)
of sec.9.4 of this title (relating to Geophysical and Geochemical Exploration
Permits) already require (i) that the special permission of the commissioner
be obtained for any permit allowing a shot in excess of 40 pounds of dynamite
equivalent, for upland areas, and 20 pounds of dynamite equivalent, in submerged
areas, and (ii) that a shot hole be at least 120 feet below the mud line.
Section 16.4 as originally adopted identified thresholds for certain GLO
and SLB actions that may adversely affect CNRAs, including geophysical and
geochemical permits, miscellaneous easements, surface leases, coastal easements,
and coastal leases. 

New sec.16.4(d) is adopted to consolidate into one threshold the thresholds
for miscellaneous easements, previously described in subsection (b) (for
real estate activities) and paragraph (c)(3) (for energy-related activities).
Approximately 90% of all miscellaneous easements issued by the GLO are for
energy-related activities. Of the remaining miscellaneous easements that
are issued for real estate activities, few affect CNRAs. In order to coordinate
the GLO's issuance of miscellaneous easements into an efficient procedure
that reflects the reality of demand for miscellaneous easements, and still
protects CNRAs against adverse affects, the GLO adopts a single threshold
based on the threshold in subparagraphs (c)(3)(A) and (B): disturbance of
five acres or more of a critical area or removal of more than 10,000 cubic
yards of material from a critical area, except with respect to submerged
aquatic vegetation and tidal mud or sand flats in the lower coast, in which
case the threshold for referral is disturbance of ten or more acres. 

The GLO, with the approval of the SLB, extended the original comment period
for an additional 30 days. Notice of that extension was published in the
July 23, 1996, issue of the Texas Register
(21 TexReg 6914). The GLO also held a meeting on August 19, 1996, with members
of the oil and gas industry, represented by the president of a trade group
of exploration contractors and representatives of six constituent members
of that trade group. The president of the trade group indicated that the
trade group represents the companies "that do virtually all of the petroleum-
finding geophysical exploration in the United States and about 90% of this
work worldwide."  

Written comments were received from four commenters associated with the
trade group, which comments can be divided into the two received before the
August 19, 1996, meeting, and the two received after the meeting. Comments
were also received from a state agency member of the council. 

One pre-meeting commenter (that copied the trade group on its comment)
urged the GLO not to adopt the charge size limitation proposed in amended
sec.16.4(c)(2) because the establishment of such a threshold would discourage
exploration and production of oil and gas in Texas coastal waters, with an
attendant reduction in revenue to the state. The charge size threshold is
based on the charge size requirement in existing sec.9.4 of this title
(relating to Geophysical and Geochemical Exploration Permits). No change
to the proposed amendment was made on the basis of this comment. 

The other pre-meeting commenter (that copied the trade group on its comment)
urged the GLO not to adopt the charge size or depth thresholds proposed in
amended sec.16.4(c)(2) because the proposed amendments would "change the
way the 'threshold' impact is measured for the issuance of seismic permits
by the GLO", and would cause substantial delays during the time the permits
are reviewed by the council. The commenter urged the development of a sliding
scale of charge sizes and depths to be applicable in different amounts for
different CNRAs and different locations. The charge size and depth thresholds
are based on the charge size and depth requirements in existing sec.9.4
of this title (relating to Geophysical and Geochemical Exploration Permits).
Permits issued by the GLO or SLB that exceed the threshold will be subject
to referral to the council for consistency review, but will not necessarily
be referred to or accepted by the council for review. No change to the proposed
amendment was made on the basis of this comment. 

Commenters at the meeting expressed concern that all permits issued in
excess of the thresholds would automatically be referred to the council for
consistency review. Commenters at the meeting also proposed that the GLO
and SLB adopt a sliding scale of charge sizes and depths to be applicable
in different amounts for different locations, depending on the CNRA to be
affected. Permits issued by the GLO or SLB that exceed the threshold will
be subject to referral to the council for consistency review, but will not
necessarily be referred to or accepted by the council for review. The GLO
is amenable to the development of a sliding scale of charge sizes and depths.
However, at this time, no body of information has been accumulated, and no
scientific analysis has been undertaken, that could form the rational basis
for such a sliding scale. No change to the proposed amendment will be made
on the basis of these comments at this time. However, the GLO may propose
amendments at a future date if subsequent data justify them. 

One post-meeting commenter, the trade group, generally supported the amended
threshold as published, but wants the GLO to work with industry to develop
a sliding scale of applicable charge sizes and depths. The GLO and the SLB
plan to work with industry as relevant information is accumulated and analyzed
for the purpose of developing a scientifically and environmentally sound
sliding scale of applicable charge sizes and depths. No change to the proposed
amendment will be made on the basis of these comments at this time. However,
the GLO may propose amendments at a future date if subsequent data justify
them.  

The other post-meeting commenter did not object to the proposed seismic
threshold, but wants the GLO to work with industry to develop a sliding scale
of applicable charge sizes and depths. The commenter proposed language for
amended sec.16.4(c)(2) that would refer to an unspecified reduced threshold
"based on site-specific test programs that demonstrate to GLO, SLB and other
resource agencies that the lesser threshold will create environmental impacts
no greater than those created by a 20 lb. shot at a depth of 120'". The GLO
and the SLB plan to work with industry as relevant information is accumulated
and analyzed for the purpose of developing a scientifically and environmentally
sound sliding scale of applicable charge sizes and depths. However, the GLO
and the SLB believe that a reference at this time to a threshold standard
to be determined in the future based on information not currently available
could have a negative impact on the agencies' ability to have sec.16.4
certified by the council as in compliance with the CMP. No change to the
proposed amendment will be made on the basis of these comments at this time.
However, the GLO may propose amendments at a future date if subsequent data
justify them.  

One commenter, a state agency member of the council, generally supported
the adoption of thresholds for geophysical permits based on shot pounds and
depth of shot instead of the acreage affected. The commenter recommended
that the language of the amended sec.16.4(c)(2) be revised to track more
closely the language of the existing shot size rule in sec.9.4 of this
title (relating to Geophysical and Geochemical Exploration Permits), which
distinguishes between allowable shot sizes for submerged and upland areas.
The GLO and the SLB agree that the commenter's recommendation would make
the threshold clearer and more closely reflect the agencies' intent in 
establishing
the threshold. The proposed amendment is adopted with changes to reflect
this comment. 

The agency commenter agreed that the amendment of the threshold for real
estate activities, as coordinated with the TNRCC, improves the threshold.
The commenter suggested combining subparagraphs sec.16.4(b)(2)(B)-(H) into
a single subparagraph sec.16.4(b)(2)(B). The GLO and the SLB believe that
the existing format of the entire rule is clear, and that the suggested revision
would not necessarily "make the thresholds more readable". No change to the
proposed amendment was made on the basis of this comment. 

The agency commenter also generally supported the thresholds for miscellaneous
easements under sec.16.4(d) as being consistent with the Railroad Commission's
thresholds for oil and gas development in critical areas. The agency commenter
made no objections on consistency grounds. 

Commenters submitting comments in favor of the section were: International
Association of Geophysical Contractors; Texas Mid- Continent Oil & Gas
Association; and Railroad Commission of Texas. Commenters submitting comments
objecting to the section were: Providence Technologies, Inc.; and Western
Geophysical Company. 

The adopted rules ensure that the relevant actions listed in sec.505.11
of this title (relating to Actions and Rules Subject to the Coastal Management
Program) taken by the GLO and the SLB comply with the goals and policies
in sec.sec.501.12-501.15 of this title (relating to Goals; Administrative
Policies; Policies for Specific Activities and Coastal Natural Resource Areas;
and Policy for Major Actions, respectively), contained in Part XVI of this
title (relating to Coastal Coordination Council). Amended sec.16.4 is consistent
with the council's CMP goals and policies as those goals and policies relate
to CNRAs, and establishes thresholds (typically based on quantitative 
measurements)
for certain actions taken by the GLO or the SLB for the council's consistency
review. The thresholds chosen for the CNRAs identified in sec.16.4 were
based on the best scientific data currently available to the GLO and the
SLB.  

Because the adopted rule amendments reflect the results of the efforts
of a task force appointed by the council, and otherwise are consistent with
the section as originally adopted, the adopted rule amendments are consistent
with all applicable CMP policies. 

The GLO has prepared a takings impact assessment (TIA) for the adoption
of these amendments. The GLO has determined that adoption of these amendments
will not result in a taking of private real property. To receive a copy of
the TIA, please send a written request to Sylvia Sissom, General Land Office,
Legal Services Division, 1700 North Congress Avenue, Room 630, Austin, Texas,
78701-1495. 

The legal basis for the new section is Texas Natural Resources
Code, sec.31.051 and sec.33.064, which provide, respectively, that the
commissioner of the GLO shall make and enforce suitable rules consistent
with the law and that the SLB may adopt procedural and substantive rules
which it considers necessary to administer, implement, and enforce Texas
Natural Resources Code, Chapter 33.

sec.16.4.Thresholds for Referral.
(a) (No changes.) 

(b) Real Estate Activities. 

(1) Except for energy-related activities (i.e., activities
related to oil, gas, or other mineral exploration and production), the GLO's
or SLB's issuance of the following instruments exceeds the threshold if the
authorized activities would adversely affect CNRA acreage greater than that
in paragraph (2) of this subsection: 

(A) a coastal easement pursuant to the Texas Natural Resources
Code, sec.33.111, for dredging of basins and channels or construction of
piers, docks, marinas, bulkheads, seawalls, and other waterfront structures
on state-owned submerged land; 

(B) a cabin permit pursuant to the Texas Natural Resources
Code, sec.33.103, for the construction or use of fishing cabins on state-owned
submerged land; or 

(C) a surface lease pursuant to the Texas Natural Resources
Code, sec.51.121, for construction of commercial facilities, artificial
reefs, and other non-waterfront structures on state- owned land. 

(2) The acreage thresholds for real estate activities
are as follows: 

(A) one-half acre of oyster reef; 

(B) one acre of submerged aquatic vegetation; 

(C) one acre of coastal wetland; 

(D) one acre of algal flat; 

(E) one acre of tidal mud flat; 

(F) one acre of tidal sand flat; 

(G) one acre of state submerged land; or 

(H) one acre of upland area fitting the definition of coastal
barrier, coastal shore area, Gulf beach, critical dune area, special hazard
area, critical erosion area, coastal historic area, or historic park, wildlife
management area, preserve, as defined in sec.16.1 of this title (relating
to Definitions and Scope).  

(c) Energy-Related Activities (activities related to oil, gas,
or other mineral exploration and production). 

(1) The GLO's or SLB's approval of a mineral lease plan of
operations for hard mineral exploration and production exceeds the threshold
if the authorized activities would adversely affect CNRA acreage greater
than the following: 

(A) In the upper coast: 

(i) one-half acre of oyster reef; 

(ii) five acres of submerged aquatic vegetation; 

(iii) five acres of coastal wetland; 

(iv) five acres of algal flat; 

(v) five acres of tidal mud flat; 

(vi) ten acres of tidal sand flat; 

(vii) 40 acres of waters in the open Gulf of Mexico; 

(viii) 40 acres of open bay waters under tidal influence; or
(ix) 40 acres of upland area fitting the definition of coastal
barrier, coastal shore area, Gulf beach, critical dune area, special hazard
area, critical erosion area, coastal historic area, or coastal park, wildlife
management area, or preserve, as defined in sec.16.1 of this title (relating
to Definitions and Scope). 

(B) In the lower coast: 

(i) one-half acre of oyster reef; 

(ii) 40 acres of submerged aquatic vegetation; 

(iii) five acres of coastal wetland; 

(iv) 20 acres of algal flat; 

(v) 20 acres of tidal mud flat; 

(vi) 40 acres of tidal sand flat; 

(vii) 40 acres of waters in the open Gulf of Mexico; 

(viii) 40 acres of open bay waters under tidal influence; or
(ix) 40 acres of upland area fitting the definition of coastal
barrier, coastal shore area, Gulf beach, critical dune area, special hazard
area, critical erosion area, coastal historic area, or coastal park, wildlife
management area, or preserve, as defined in sec.16.1 of this title (relating
to Definitions and Scope). 

(2) The GLO's or SLB's issuance of a geophysical
permit for exploration for oil, gas, or other minerals on state-owned lands
exceeds the threshold if the permit authorizes one of the following: 

(A) For upland areas, a shot in excess of 40 pounds of dynamite
equivalent; 

(B) For submerged areas, either; 

(i) a shot in excess of 20 pounds of dynamite equivalent; or
(ii) a shot hole less than 120 feet below the mud line. 

(3) With respect to energy-related activities
not covered within the scope of a hard mineral plan of operations, the GLO's
or SLB's issuance of a surface lease (pursuant to the Texas Natural Resources
Code, sec.51.121), or a coastal easement (pursuant to the Texas Natural
Resources Code, sec.33.111), exceeds the threshold only if the instrument
authorizes: 

(A) permanent disturbance of five acres or more of a critical
area or removal of more than 10,000 cubic yards of material from a critical
area, except with respect to submerged aquatic vegetation and tidal mud or
sand flats in the lower coast; or 

(B) permanent disturbance of ten acres or more of submerged
aquatic vegetation or tidal mud or sand flats in the lower coast. 

(d) A miscellaneous easement issued pursuant to the Texas Natural
Resources Code, sec.51.291, exceeds the threshold for potential referral
if the miscellaneous easement authorizes: 

(1) permanent disturbance of five acres or more of a critical
area or removal of more than 10,000 cubic yards of material from a critical
area, except with respect to submerged aquatic vegetation and tidal mud or
sand flats in the lower coast, or 

(2) permanent disturbance of ten acres or more of submerged
aquatic vegetation or tidal mud or sand flats in the lower coast. 

(e) Any GLO or SLB action described in sec.16.1 of this title
(relating to Definitions and Scope) that may adversely affect a CNRA that
has not been specifically addressed in this section, exceeds the threshold
if the action would adversely affect greater than 40 acres of any such CNRA.
(f) Any GLO or SLB action described in sec.16.1 of this title
(relating to Definitions and Scope) that may adversely affect a CNRA must
be consistent with the goals and policies in sec.16.2 and sec.16.3 of
this chapter (relating to Policy for Major Actions, and Policies for Specific
Activities and Coastal Natural Resource Areas), whether above or below the
applicable threshold.   

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on October 1, 1996.
TRD-9614387
Garry Mauro

Commissioner, General Land Office

General Land Office

Effective date: October 23, 1996

Proposal publication date: June 14, 1996

For further information, please call: (512) 305-9129

TITLE 34. PUBLIC FINANCE
PART I. Comptroller of Public Accounts
CHAPTER 3. Tax Administration
SUBCHAPTER V. Franchise Tax
34 TAC sec.3.573
The Comptroller of Public Accounts adopts an amendment to
sec.3.573, concerning provisional exemptions, without changes to the proposed
text as published in the June 25, 1996, issue of the 
Texas Register (21 TexReg 5849). 

The proposed changes reflect amendments made by Senate Bill 644, 74th 
Legislature,
1995. The definition of beginning date has been revised. Corporations who
have applied for federal tax exemption under the provisions of Internal Revenue
Code, sec.501(c)(8), (10), or (19) have been added to the corporations
who may qualify for provisional franchise tax exemption. 

No comments were received regarding adoption of the amendment. 

The amendment is adopted under the Tax Code, sec.111.002, which
provides the comptroller with the authority to prescribe, adopt, and enforce
rules relating to the administration and enforcement of the provisions of
the Tax Code, Title 2.

The amendment implements the Tax Code, sec.171.063. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on October 1, 1996.
TRD-9614331
Martin Cherry

Chief, General Law

Comptroller of Public Accounts

Effective date: October 22, 1996

Proposal publication date: June 25, 1996

For further information, please call: (512) 463-4028

CHAPTER 5. Funds Management (Fiscal Affairs)
Purchase Vouchers
34 TAC sec.5.55
The Comptroller of Public Accounts adopts the repeal of sec.5.55,
concerning prompt payment law requirements for state agencies, without changes
to the proposed text as published in the August 20, 1996, issue of the 
Texas Register (21 TexReg 7786). 

The section is being repealed because it is unnecessary. The section repeals
the requirements of the prompt payment statute without adding any significant
substantive requirements or interpretations. In addition, the section's voucher
requirements are more appropriate for the comptroller's State of Texas Purchase
Voucher Guide than a formal rule. 

No comments were received regarding adoption of the repeal. 

The repeal is adopted under the Government Code, sec.2101.035,
which authorizes the comptroller to adopt rules for the effective operation
of the uniform statewide accounting system. 

The repeal implements the Government Code, sec.2101.035. 

This agency hereby certifies that the repeal has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on October 1, 1996.
TRD-9614330
Martin Cherry

Chief, General Law

The Comptroller of Public Accounts

Effective date: October 22, 1996

Proposal publication date: August 20,1996

For further information, please call: (512) 463-4028

Voided Warrants
34 TAC sec.5.151
The Comptroller of Public Accounts adopts the repeal of sec.5.151,
concerning the destruction of warrants, without changes to the proposed text
as published in the August 20, 1996, issue of the 
Texas Register (21 TexReg 7787). 

The section is being repealed because it is obsolete and unnecessary. The
procedures for the destruction of warrants by comptroller employees do not
need to be in a formal rule. 

No comments were received regarding adoption of the repeal. 

The repeal is adopted under the Government Code, sec.2101.035,
which authorizes the comptroller to adopt rules for the effective operation
of the uniform statewide accounting system. 

The repeal implements the Government Code, sec.2101.035.

This agency hereby certifies that the repeal has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on October 1, 1996.
TRD-9614329
Martin Cherry

Chief, General Law

Comptroller of Public Accounts

Effective date: October 22, 1996

Proposal publication date: August 20, 1996

For further information, please call: (512) 463-4028

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART IV. Texas Commission for the Blind
CHAPTER 163.Vocational Rehabilitation Program
SUBCHAPTER D.Order of Selection for Payment of Services
40 TAC sec.sec.163.50-163.52
The Texas Commission for the Blind adopts the repeal of sec.sec.163.50-163.52,
and simultaneously adopts new sec.sec.163.50-163.52, concerning the provision
of vocational rehabilitation services without changes to the proposed text
as published in the August 27, 1996, issue of the 
Texas Register (21 TexReg 8091). 

The commission adopts the repeal and new sections to comply with the 
Rehabilitation
Act of 1973, sec.101(a)(5)(A), as amended. The rules will serve, in times
of limited funding, as an order of selection for receiving services. The
Act requires the agency to consider functional limitations when determining
the severity of a person's disabilities. 

No comments were received regarding adoption of the repeal and new sections.
The repeals are adopted under the Human Resources Code, Title
5, Chapter 91, sec.91.011(g), which authorizes the commission to adopt
rules prescribing the policies and procedures followed by the commission
in the administration of its programs. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614305
Pat D. Westbrook

Executive Director

Texas Commission for the Blind

Effective date: November 1, 1996

Proposal publication date: August 27, 1996

For further information, please call: (512) 459-2611

SUBCHAPTER D.Order of Selection for Services
40 TAC sec.sec.163.50-153.52
The new sections are adopted under the Human Resources Code,
Title 5, Chapter 91, sec.91.011(g), which authorizes the commission to
adopt rules prescribing the policies and procedures followed by the commission
in the administration of its programs. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614304
Pat D. Westbrook

Executive Director

Texas Commission for the Blind

Effective date: November 1, 1996

Proposal publication date: August 27, 1996

For further information, please call: (512) 459-2611

SUBCHAPTER E.Consumer Participation in Cost of Services
40 TAC sec.163.61
The Texas Commission for the Blind adopts the repeal of sec.163.61,
and simultaneously adopts new sec.163.61, concerning consumer participation
in the cost of vocational rehabilitation services without changes to the
proposed text as published in the August 27, 1996, issue of the 
Texas Register (21 TexReg 8092). 

The commission adopts the repeal and new section to increase the services
exempt from consumer participation in their cost. The new rule adds all training
and assistive technology devices and equipment necessary for employment to
the list of exempt services. 

No comments were received regarding adoption of the repeal and new section.
The repeal is adopted under the Human Resources Code, Title 5, Chapter
91, sec.91.011(g), which authorizes the commission to adopt rules prescribing
the policies and procedures followed by the commission in the administration
of its programs.

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614303
Pat D. Westbrook

Executive Director

Texas Commission for the Blind

Effective date: November 1, 1996

Proposal publication date: August 27, 1996

For further information, please call: (512) 459-2611


The new section is adopted under the
Human Resources Code, Title 5, Chapter 91, sec.91.011(g), which authorizes
the commission to adopt rules prescribing the policies and procedures followed
by the commission in the administration of its programs. 

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on September 30, 1996.
TRD-9614302
Pat D. Westbrook

Executive Director

Texas Commission for the Blind

Effective date: November 1, 1996

Proposal publication date: August 27, 1996

For further information, please call: (512) 459-2611

PART XIX. Texas Department of Protective and Regulatory
Services
CHAPTER 705.Adult Protective Services
The Texas Department of Protective and Regulatory Services (TDPRS)
adopts new sec.sec.705.1001, 705.3101, and 705.3102 in its Adult Protective
Services chapter. New sec.705.1001 is adopted with changes to the proposed
text as published in the June 7, 1996, issue of the 
Texas Register (21 TexReg 5162). New sec.705.3101 and sec.705.3102
are adopted without changes to the proposed text and will not be republished.
The justification for the new sections is to incorporate changes needed
because of recent legislation and implementation of the Child and Adult 
Protective
System (CAPS) automated system. 

The new sections will function by providing an increased awareness of services
for victims of family violence. 

No comments were received regarding adoption of the new sections. TDPRS,
however, has initiated two clarifications to the text of sec.705.1001.
In the definition of caretaker, the words "and medical" are deleted and the
word "or" is added. In the definition of sexual abuse the words "including
conduct" are added after the phrase "any involuntary or nonconsensual sexual
conduct."  

Definitions
40 TAC sec.705.1001
The new section is adopted under the Human Resources Code,
Title 2, Chapters 40 and 48, which authorizes the department to administer
protective services for elderly persons and adults with disabilities. 

The new section further implements Chapter 48 of the Human Resources Code. 
sec.705.1001.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise:

Abuse-The negligent or willful infliction of injury, unreasonable
confinement, intimidation, or cruel punishment with resulting physical or
emotional harm or pain by a caretaker, family member, or other individual
with whom the elderly or disabled person has an ongoing relationship.

Adult-A person 18 or older, or an emancipated minor. Aged
or elderly person-A person 65 or older.

Allegation-An assertion that an elderly person or an adult
with a disability is in a state of or at risk of harm due to abuse, neglect,
or exploitation.

Alleged perpetrator-A person who is reported to be responsible
for the abuse, neglect, or exploitation of an elderly person or an adult
with a disability. 

Alleged victim-An elderly person or an adult with a disability
who has been reported to adult protective services staff to be in a state
of or at risk of abuse, neglect, or exploitation.

Alleged victim/perpetrator-An elderly person or an adult with
a disability who has been reported to adult protective services staff to
be in a state of or at risk of self neglect or suicidal threat.

Authorized representative-A person appointed by an alleged
victim or a client to speak for him or act on his behalf.

Capacity to consent-Having the mental and physical ability
to understand the current problems and the services offered and to accept
or reject those services knowing the consequences of the decision. 

Caretaker-A guardian, representative payee, or other person
who by act, words, or course of conduct has acted so as to cause a reasonable
person to conclude that he has accepted the responsibility for protection,
food, shelter, or care for an elderly person or an adult with a disability. 
Child and Adult Protective System (CAPS)-The software application
by which Adult Protective Services (APS) and Child Protective Services (CPS)
staff document cases.

Client-An elderly person or an adult with a disability who
has been determined in a validated finding to be in need of protective services. 
Collateral contact-Contact with a person, other than a principal,
who has knowledge of the situation and is a source of information for completion
of the investigation or the delivery of services.

Community care-Services provided within the client's own home,
neighborhood, or community, as alternatives to institutional care. Community
care is sometimes called alternate care.

Designated perpetrator-A person who has been determined in
a validated finding to have abused, neglected, or exploited an elderly person
or an adult with a disability.

Designated victim-An elderly person or an adult with a disability
for which a finding of abuse, neglect, or exploitation has been validated.
Designated victim/perpetrator-An elderly person or an adult
with a disability for which a finding of self neglect or suicidal threat
has been validated. 

Disabled person-A person with a physical, mental, or developmental
disability that substantially impairs the personþs ability to provide
adequately for the person's care or protection and who is 18 years of age
or older or under 18 years of age and who has had the disabilities of minority
removed. (Human Resources Code, sec.48.002) 

Emancipated minor-A person under 18 years of age who has the
power and capacity of an adult. This includes a minor who has had the 
disabilities
of minority removed by a court of law or a minor who, with or without parental
consent, has been married. Marriage includes common-law marriage.

Emotional or verbal abuse-Any use of verbal communication
or other behavior to humiliate, intimidate, vilify, degrade, or threaten
with harm. Exploitation-The illegal or improper act or process of a caretaker,
family member, or other individual who has an ongoing relationship with an
elderly or disabled person using the resources of the elderly or disabled
person for monetary or personal benefit, profit, or gain without the informed
consent of the elderly or disabled person. (Human Resources Code, sec.48.002) 
Family violence-An act by a member of a family or household
against another member of the family or household that is intended to result
in physical harm, bodily injury, assault, or sexual assault or that is a
threat that reasonably places the member in fear of imminent physical harm,
bodily injury, assault, or sexual assault, but does not include defensive
measures to protect oneself. (Texas Family Code, sec.71.01(b)(2))

Institution-An establishment that furnishes, in one or more
facilities, food and shelter to four or more persons who are unrelated to
the proprietor of the establishment and provides minor treatment under the
direction and supervision of a physician licensed by the Texas State Board
of Medical Examiners, or other services that meet some need beyond the basic
provision of food, shelter, and laundry. (Health and Safety Code, 
sec.242.002(5)) 
Least restrictive alternative-An action or service that protects
a client while allowing personal autonomy to the fullest degree possible.
Neglect-The failure to provide for one's self the goods or
services, including medical services, which are necessary to avoid physical
or emotional harm or pain or the failure of a caretaker to provide the goods
or services. (Human Resources Code, sec.48.002) 

Personal care facility-An establishment, including a board
and care home, that furnishes, in one or more facilities, food and shelter
to four or more persons who are unrelated to the proprietor of the establishment
and provides personal care services. (Health and Safety Code, sec.247.002(3)) 
Primary worker-The APS worker assigned primary responsibility
for a case and serves the area where the client is located. Principal-The
alleged victim/client or perpetrator in an APS case. 

Protective services-The services furnished by the department
or by a protective services agency to an elderly or disabled person who has
been determined to be in a state of abuse, exploitation, or neglect. These
services may include social casework, case management, and arranging for
psychiatric and health evaluation, home care, day care, social services,
health care, and other services consistent with the Human Resources Code,
Chapter 48. (Human Resources Code, sec.48.002)

Provider agency (contractor)-An agency that has contracted
with the Texas Department of Protective and Regulatory Services to provide
authorized services for adult protective service clients.

Reporter-A person who makes a referral to adult protective
services staff about a situation of alleged abuse, neglect, or exploitation
of an elderly person or an adult with a disability. 

Secondary worker-A caseworker who assists the primary worker
by conducting interviews, researching records, or providing other assistance
in a case. This caseworker has access to the electronic case file and is
able to perform any tasks for that case in CAPS that a primary worker can
perform. 

Sexual abuse-Any involuntary or nonconsensual sexual conduct
including conduct that would constitute an offense under the Texas Penal
Code, sec.21.08 or the Texas Penal Code, Chapter 22. (Human Resources Code,
sec.48.002). 

Sustained perpetrator-A person for which at least one validated
finding of abuse, neglect, or exploitation of an elderly person or an adult
with a disability has been sustained by an administrative review or a release
hearing.

This agency hereby certifies that the adoption
has been reviewed by legal counsel and found to be a valid exercise of the
agency's legal authority.

Issued in Austin, Texas, on October 2, 1996.
TRD-9614369
C. Ed Davis

Deputy Director, Legal Services

Texas Department of Protective and Regulatory Services

Effective date: October 23, 1996

Proposal publication date: June 7, 1996

For further information, please call: (512) 438-3765

Family Violence
40 TAC sec.705.3101, sec.705.3102
The new sections are adopted under the Human Resources Code,
Title 2, Chapters 40 and 48, which authorizes the department to administer
protective services for the elderly. 

The new sections implement Chapter 54, Human Resources Code and Amendment
by Acts 1995, 74th Legislature Chapter 559 sec.1 found in the note preceding
Chapter 40 of the Human Resources Code.  

This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal 
authority. 
Issued in Austin, Texas, on October 2, 1996.
TRD-9614370
C. Ed Davis

Deputy Director, Legal Services

Texas Department of Protective and Regulatory Services

Effective date: October 23, 1996

Proposal publication date: June 7, 1996

For further information, please call: (512) 438-3765

TITLE 43. TRANSPORTATION
PART I. Texas Department of Transportation
CHAPTER 21. Right of Way
SUBCHAPTER I. Control of Outdoor Advertising Signs
43 TAC sec.21.142, sec.21.146, sec.21.150
The Texas Department of Transportation adopts amendments
to sec.sec.21.142, 21.146, and 21.150. Section 21.150 is adopted with
changes to the proposed text as published in the June 28, 1996, issue of
the Texas Register (21 TexReg 5964). Sections
21.142 and 21.146 are adopted without changes and will not be republished.
The amended sections are necessary to ensure the department's proper 
administration
of the laws concerning the control of outdoor advertising signs along the
interstate and primary systems. 

The National Highway System Designation Act of 1995 amended Title 23, United
States Code, Section 101 to provide for the designation of the national highway
system and for other purposes. 

Title 23, United States Code, sec.131 requires the states to control
outdoor advertising along the interstate and primary systems. Section 131(t)
defines the primary system for purposes of the Federal Highway Beautification
Act as the primary system in existence on June 1, 1991, and any highway which
is not on such system but which is on the national highway system. 

Transportation Code, Chapter 391, previously codified at Texas Civil Statutes,
Article 4477-9a (the "Highway Beautification Act"), provides the department
with authority to control outdoor signs on the interstate or primary system
of highways. 

The amendment to sec.21.142 modifies the definition of federal-aid primary
highway to include those highways on the National Highway System as defined
under Title 23, United States Code, sec.103(b) and those highways on the
primary system as of June 1, 1991. The amendment also adds a definition for
National Highway System. 

The amendment to sec.21.146 allows the department to permit legally erected
signs along highways which were not previously subject to the department's
jurisdiction under the State Highway Beautification Act but which were later
added to the interstate or primary system. 

The amendment to sec.21.150 allows the department to convert a sign registration
or permit issued under sec.21.431 or sec.21.441 of this title (relating
to Control of Signs Along Rural Roads) to a permit for a sign under the State
Highway Beautification Act. The holder of a converted permit will not be
required to pay an initial permit fee; however, the holder will be required
to pay annual renewal fees. 

On July 18, 1996, the department conducted a public hearing on the proposed
amended sections. One individual representing the Outdoor Advertising 
Association
suggested abating or mitigating the fees in the initial stage of bringing
the signs along the newly controlled routes under the department's control.
Written comments from the same individual were received requesting (1) that
a vote on the proposed rules be postponed to allow the association and its
members to obtain a map of the new highways which will be added to the 
department's
control, and (2) that the fees be lowered by 50% for the first year in order
to mitigate the initial impact of the additional fees on the outdoor advertising
operator, especially the "small business" operators. 

Response to the request for maps: On August 12, 1996, the department provided
maps to the Outdoor Advertising Association, depicting the highways on the
National Highway System which were not previously subject to the department's
jurisdiction. 

Response for request to reduce initial permit fees: The department has
revised sec.21.150(g)(1), (3) and (4) to provide for an initial permit
fee of $50.00 for signs already in existence which later become subject to
the department's jurisdiction in order to minimize the financial impact on
small business owners. 

The department has revised sec.21.150(b)(3) to clarify that the department
may issue permits for signs lawfully in existence which do not meet all 
applicable
requirements of the regulations. 

The department has revised sec.21.150(l) to clarify that the renewals
for signs converted from a rural road permit or registration are due on the
date the rural road registration or permit would have been due. 

The department has also revised sec.21.150(l) to clarify that a holder
of a converted rural road permit or registration will not be required to
pay to obtain an initial set of permit plates, since permit plates are not
required under the Rural Road Act, Transportation Code, Chapter 394.

The amendments are adopted under Transportation Code, sec.201.101,
which provides the Texas Transportation Commission with the authority to
establish rules for the conduct of the work of the Texas Department of 
Transportation,
and more specifically Texas Transportation Code, sec.391.065, which authorizes
the commission to adopt rules to regulate the erection and maintenance of
outdoor advertising signs along the interstate and primary system of highways. 
sec.21.150. Permits.
(a) Eligibility. Except as provided in subsection (k) of this
section, a permit under this section may only be issued to a sign owner holding
a valid license issued pursuant to sec.21.149 of this title (relating to
Licenses). 

(b) Application and issuance. 

(1) Except as provided in sec.21.151 of this title (relating
to Local Control) a sign owner who desires a permit to erect or maintain
a sign as required in sec.21.146 of this title (relating to Signs Controlled)
must file an application in a form prescribed by the department, which shall
include, but not be limited to: 

(A) the name and address of the applicant; 

(B) proposed location and description of the sign; 

(C) name and address of the site owner; 

(D) indication that the site owner has consented to the erection
of the sign; 

(E) verification of the applicant's nonprofit status if the
sign is a nonprofit sign; and 

(F) such additional information as the department deems necessary.
(2) The application must be signed under oath by
the sign owner and filed with the district engineer in whose district the
sign is to be erected or maintained, and shall be accompanied by the prescribed
fee or fees. 

(3) An application will not be approved unless the sign
for which the permit is requested meets all applicable requirements of the
sections under this subchapter, or was lawfully in existence when the sign
became subject to the department's jurisdiction. 

(4) If approved, a copy of the application, endorsed by
the district engineer, or his or her designee, and a Texas sign permit plate
will be issued to the applicant. Not later than 30 days after erection of
the permitted sign, or after the issuance of a permit if the sign is lawfully
in existence when the highway along which it is located becomes subject to
control by the department, the sign owner shall cause the permit plate to
be securely attached to that portion of the sign structure nearest the highway
and visible from the main traveled way. 

(c) Renewals. 

(1) Subject to the terms and location stated in the permit
application, a permit issued or renewed under this section shall be valid
for a period of one year, provided that the sign is erected and maintained
in accordance with the applicable sections under this subchapter. The permitted
sign must be erected within one year from the date the original permit is
issued in order for a sign permit to be eligible for renewal. 

(2) A permit issued by the department prior to September
6, 1985, must be renewed no later than October 1, 1991. 

(3) An annual permit issued subsequent to September 5,
1985, must be renewed prior to the expiration date of that permit. 

(4) To renew a permit under this subsection a permit holder
must file with the district engineer a written request in a form prescribed
by the department, together with the prescribed renewal fee; and further
provided that the sign continues to meet all applicable requirements. 

(d) Refunds and prorations. 

(1) All payments not in accordance with the fees described
in subsection (g) of this section which were received after September 5,
1985, and before September 1, 1991, for renewals of permits issued by the
department prior to September 6, 1985, will be refunded. This refund does
not release the current owner of an advertising sign from complying with
the renewal provisions prescribed in subsection (c) of this section. 

(2) All payments for renewals of annual permits due subsequent
to September 1, 1990, that were in excess of the fees described in subsection
(g) of this section, will be prorated to provide credit for subsequent renewals
of the applicable permit. The credit shall be equal to the product of the
amount which is in excess of the fee which would be assessed under subsection
(g) of this section, multiplied by a fraction, the numerator of which is
equal to the number of days from September 1, 1991, remaining for which the
permit is valid, and the denominator of which is equal to 365 days; provided,
however, this amount will be refunded if requested by the permit holder for
the permit or the amount will be refunded if deemed appropriate by the 
department.
The credit is calculated by using the following formula.

Figure: 43 TAC sec.21.150 (d)(2)

(e) Transfer. 

(1) A permit may only be assigned or transferred with the written
approval of the district engineer. At the time of the transfer, both the
transferor and the transferee must hold a valid outdoor advertising license
issued pursuant to sec.21.149 of this title (relating to Licenses), except
as provided in paragraphs (3) and (4) of this subsection. 

(2) The holder of a permit or permits who desires to transfer
one or more permits must file with the district engineer a request in a form
prescribed by the department together with the prescribed transfer fee. The
transferor and transferee will each be issued a copy of the approved permit
transfer form. 

(3) A permit issued under subsection (k) of this section
may be transferred to a nonprofit organization that does not hold a valid
outdoor advertising license issued under sec.21.149 of this title (relating
to Licenses) if the permit is transferred for the purpose of maintaining
a nonprofit sign. 

(4) A permit issued under subsection (k) of this section
may be transferred for a purpose other than maintaining a nonprofit sign
if the transferee holds a valid outdoor advertising license at the time of
the transfer. 

(f) Replacement. In the event a permit plate is lost or stolen,
is missing from the sign structure, or becomes illegible, the sign owner
must submit to the district engineer a request for a replacement plate in
a form prescribed by the department, together with the prescribed replacement
fee. 

(g) Fees. 

(1) Except as provided in paragraphs (2) and (3) of this subsection,
for a permit issued pursuant to this section: 

(A) the original fee is $96 for each sign; 

(B) the annual renewal fee is $40; 

(C) the transfer fee for one or more permits transferred in
a single transaction is $25 per permit or a total of $2,500, whichever is
less; and 

(D) the replacement fee is $25. 

(2) For a nonprofit sign: 

(A) the original fee is $10 for each sign; 

(B) the annual renewal fee is $10; and 

(C) the transfer fee is waived for the transfer of a permit
issued under subsection (k) of this section if the permit is transferred
under subsection (e)(3) of this section. Any other permit transfer is subject
to the provisions of paragraph (1) of this subsection. 

(3) For a sign lawfully in existence which becomes
subject to the Act the initial fee shall be $50. 

(4) A fee prescribed in this subsection is payable by
check, cashier's check, or money order, and is nonrefundable. 

(h) Expiration or cancellation. The director of right of way
may cancel a permit issued pursuant to this section if the sign subject to
the permit is acquired by the state, is removed, or is not maintained in
accordance with applicable sections under this subchapter or Transportation
Code, Chapter 391. 

(i) Removal. If a permit expires without renewal, is canceled
without reinstatement, or if a sign other than an exempt sign is erected
or maintained without a permit, the owner of the involved sign and sign 
structure
shall, upon written notification by the district engineer, effect their removal
at no cost to the state. 

(j) Notice and appeal. Upon determination that a permit should
be canceled, the director of right of way shall mail a notice of cancellation
to the last known address of the permit holder by certified mail. 

(1) The notice shall clearly state: 

(A) the reasons for the cancellation; 

(B) the effective date of the cancellation; and 

(C) the right of the permit holder to request an administrative
hearing on the question of the cancellation. 

(2) A request for an administrative hearing under
this subsection must be made in writing to the director of right of way within
10 days of the receipt of the notice of cancellation. 

(3) If timely requested, an administrative hearing shall
be conducted in accordance with sec.sec.1.21-1.63 of this title (relating
to Contested Case Procedure), and shall serve to abate the cancellation unless
and until that cancellation is affirmed by order of the commission. 

(k) Nonprofit signs. 

(1) A nonprofit organization may obtain a permit under this
section to erect or maintain a nonprofit sign. 

(2) In order to qualify for a permit issued under this
subsection, a sign must comply with all applicable requirements under this
subchapter from which it is not specifically exempted. 

(3) An application for a permit under this section must
include, in detail, the content of the message to be displayed on the sign.
Prior to changing the message on any sign permitted under this section, the
permit holder must obtain the approval of the district engineer in whose
district the sign is maintained. 

(4) If at any time the sign ceases to be a nonprofit sign,
the permit will be subject to cancellation pursuant to subsection (h) of
this section. 

(5) If the holder of a permit issued under this subsection
loses its nonprofit status or wishes to advertise or promote something other
than the municipality or political subdivision, an outdoor advertising license
must be obtained pursuant to sec.21.149 of this title (relating to Licenses),
the permit must be converted to a permit for a sign other than a nonprofit
sign, and the holder must pay the original permit fee set forth in subsection
(g)(1) and annual renewal fees set forth in subsection (g)(2) of this section.
(6) A nonprofit organization that holds a valid permit
for a nonconforming sign that would otherwise qualify for a permit under
this subsection may convert its permit to one issued under this subsection. 
(l) Conversion of rural road permits and registrations. The
department will convert a registration issued under sec.21.431 of this
title (relating to Registration of Existing Off-Premise Signs) or a permit
issued under sec.21.441 of this title (relating to Permit for Erection
of Off-Premise Sign) to a permit under this section if a highway previously
controlled in accordance with Transportation Code, Chapter 394 becomes subject
to control under the Act. A holder of a permit or registration converted
under this subsection will not be required to pay an original permit fee
under subsection (c)(A) of this section; however, the permit must be renewed
annually under subsection (c)(B) of this section, on the date the renewal
of the permit or registration issued under sec.21.431 or sec.21.441 would
have been due. In the event a sign owner has prepaid registration fees, the
outstanding prepayment will be credited to the sign owner's annual renewal
fee. The department will issue permit plates to a holder of a permit or a
registration converted under this subsection at no charge. In the event 
replacement
plates are needed after the initial issuance, fees will be charged in accordance 
with this section. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority. 
Issued in Austin, Texas, on September 26, 1996.
TRD-9614155
Bob Jackson
Deputy General Counsel
Texas Department of Transportation
Effective date: October 17, 1996
Proposal publication date: June 28, 1996
For further information, please call: (512) 463-8630