PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

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1 TITLE 1. ADMINISTRATION PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION CHAPTER 354. MEDICAID HEALTH SERVICES SUBCHAPTER A. PURCHASED HEALTH SERVICES DIVISION 5. PHYSICIAN AND PHYSICIAN ASSISTANT SERVICES 1 TAC The Texas Health and Human Services Commission (HHSC) proposes to amend , concerning Authorized Physician Services. Background and Justification The proposed amendment adds services provided by an anesthesiologist assistant to the rule regarding the conditions under which a physician may bill Texas Medicaid and aligns the rule with other program rules ( and of this title (relating to Anesthesiologist Assistant Conditions of Participation and Anesthesiologist Assistant Benefits and Limitations)). The Texas Medicaid Program reimburses for services provided by an anesthesiologist assistant under the supervision of a licensed anesthesiologist. Section-by-Section Summary Proposed (d) refers to services provided by an anesthesiologist assistant, as well as of this title. The proposed rule also corrects a reference to the title of a rule regarding certified registered nurse anesthetists. Fiscal Note Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that during the first five years the proposal is in effect there is no expected impact to costs or revenues of state or local governments to implement and enforce the rule as proposed. There are no anticipated economic costs to persons who are required to comply with the amended rule. There is no anticipated negative impact on local employment. Small and Micro-business Impact Analysis HHSC has determined that there is no anticipated adverse effect on small businesses or micro-businesses to comply with the rule as proposed. This rule brings the TAC into alignment with current Medicaid policy and reimbursement methodology and does not change the current reimbursement rates to small businesses and micro-businesses. Public Benefit Chris Traylor, Chief Deputy Commissioner, has determined that for each year of the first five years the section is in effect, the public will benefit from the adoption of the rule. The anticipated public benefit of enforcing the proposed amended rule will be enrollment of new Medicaid providers, which could lead to improved access to care. Regulatory Analysis HHSC has determined that this proposal is not a "major environmental rule" as defined by of the Texas Government Code. A "major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. Takings Impact Assessment HHSC has determined that this proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under of the Government Code. Public Comment Written comments on the proposal may be submitted to Kami Geoffray, Senior Policy Advisor, Office of Medicaid/CHIP Policy, Medicaid/CHIP Division, Health and Human Services Commission, MC-H310, Brown Heatly Building, P.O. Box 85200, Austin, Texas ; by fax to (512) ; or by to [email protected] within 30 days of publication of this proposal in the Texas Register. Statutory Authority The amendment is proposed under Texas Government Code , which provides the Executive Commissioner of HHSC with broad rulemaking authority, and Texas Human Resources Code and Texas Government Code , which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas. The proposed rule implements Texas Human Resources Code Chapter 32 and Texas Government Code Chapter 531. No other statutes, articles, or codes are affected by this proposal Authorized Physician Services. PROPOSED RULES May 1, TexReg 2345

2 (a) This rule specifies the conditions under which a physician may bill Texas Medicaid for covered services. Such conditions include compliance with this rule as well as compliance with all applicable federal and state laws, rules, regulations and policies relating to covered services. (b) Physician services. A physician may bill for reasonable and medically necessary services that are within the scope of practice of medicine or osteopathy as defined by state law. Except for services provided under subsections (c), (d), and (e) of this section, eligible physician services include those performed by the physician and those medical acts delegated by the physician to qualified and properly trained persons acting under the physician's supervision. Delegation and supervision of medical services must be consistent with this chapter and the rules and laws of the Texas Medical Board, and supervision of the delegated medical act must be appropriately documented in the patient's chart. A physician shall not bill the Texas Medicaid program for services if that billing would result in duplicate payment for the same services. (c) Physician supervising other physicians. A physician supervising other physicians may bill when the supervision and services are performed in the context of an accredited graduate medical education program. Facilities and professional practices do not qualify for reimbursement for services provided by resident physicians in an outpatient setting unless the facility or professional practice is owned by, or affiliated with, an accredited graduate medical education program. (1) For all services billed to the Medicaid program, the supervision must be medically appropriate, as described in this rule, and provided to a resident physician performing a Medicaid-covered service. The supervision must be either personal or direct. To qualify for reimbursement, the medical record must clearly establish: (A) The nature of the supervisory role of the billing physician in the delivery of the services provided by the resident physician; and (B) That the supervision complies with the definition of supervision applicable to the covered service, as defined in of this title (relating to Definitions). (2) Personal supervision is required during the key portions of all major surgeries and the key portions of all other physician services billed to the Medicaid program if the immediate supervision, participation, or intervention of the supervising physician is medically prudent in order to assure the health and safety of the patient. Physician services that require personal supervision may include invasive procedures and evaluation and management services that require complex medical decision making. Situations that require personal supervision include those in which: (A) The clinical condition of the patient is unstable or will likely become unstable during, or as a result of, the planned medical intervention; or (B) The planned medical intervention, even under optimal conditions, will result in medically reasonable risk for significant morbidity or death following the service or procedure; or (C) Deviation from expected technique at the time the procedure or service is performed presents a medically reasonable, causally-related, foreseeable risk to the patient's life or health. (3) For surgical services, the supervising surgeon is responsible for pre-operative, operative, and post-operative care provided to the patient and billed to the Medicaid program. The supervising surgeon, however, may delegate the pre- and post-operative care to a resident if appropriate direct supervision, as defined in of this title, is provided. (4) For all services that do not require personal supervision and are billed to the Medicaid program, the supervising physician must provide direct supervision. The supervising physician may not provide direct supervision for an activity at the same time as providing personal supervision for another activity, with the following exceptions. (A) The supervising physician in the outpatient setting may provide personal and direct supervision concurrently for residents providing evaluation and management services; and (B) A supervising surgeon or supervising anesthesiologist may be involved in two concurrent anesthesia cases with residents. The supervising surgeon or supervising anesthesiologist must be present during all key portions of the procedure if the immediate supervision, participation, or intervention of the supervising physician is medically prudent in order to assure the health and safety of the patient. (5) Supervision in the outpatient setting. A face-to-face encounter between the physician providing direct supervision and the patient is not required in the outpatient setting in the context of a graduate medical education program. All other requirements for personal or direct supervision in this division must be met for the services to qualify for reimbursement. The supervising physician must document that he/she: (A) Reviewed the patient's history and physical examination; (B) Confirmed or revised the patient's diagnosis; (C) Determined the course of treatment to be followed; (D) Assured that any needed supervision of interns or residents was provided; and (E) Confirmed that the documentation in the medical record comports with the level of service billed. (6) Supervision in the inpatient setting. A physician who supervises other physicians in an inpatient setting must comply with documentation requirements of paragraph (5)(A) - (E) of this subsection and must document that he or she has completed a: (A) Personal examination of the patient not later than 36 hours after the patient's admission and before the patient's discharge and, as necessary, based on the patient's condition; and (B) Face-to-face encounter with the patient on the same day as any billed services provided by the resident physician. (d) Services provided by a physician assistant, anesthesiologist assistant, or advanced practice registered nurse. (1) A service performed under a physician's supervision by a physician assistant or an advanced practice registered nurse (excluding a certified registered nurse anesthetist), acting within the scope of the physician assistant's or advanced practice registered nurse's license and consistent with this chapter and the rules and laws of the Texas Medical Board and Texas Board of Nursing, as applicable, are reimbursed according to the reimbursement rule applicable to the supervised practitioner unless the supervising physician made a decision regarding the patient's care or treatment on the same date of service as the billable medical visit and documented that decision in the patient's record. (A) The physician's record of patient care must document the physician's involvement. 40 TexReg 2346 May 1, 2015 Texas Register

3 (B) If the physician did not make a decision about the patient's care on the same date of service as the billable medical visit, the physician must note on the claim that the service was performed by the physician assistant or advanced practice registered nurse in accordance with of this subchapter (relating to Claim Information Requirements). (2) Services provided by a certified registered nurse anesthetist must be billed as described in of this subchapter [title] (relating to Benefits and Limitations [Certified Registered Nurse Anesthetists' Services]). (3) Services provided by an anesthesiologist assistant must be billed as described in of this division (relating to Anesthesiologist Assistant Benefits and Limitations). (e) Substitute physician. A physician may bill for the services of a substitute physician who sees patients in the billing physician's practice under either a reciprocal or locum tenens arrangement. To qualify for reimbursement, the billing physician and substitute physician must comply with the following requirements: (1) The substitute physician's name and address must be documented on the claim. (2) The substitute physician must be licensed to practice in the state of Texas. (3) Consistent with the requirements of and of this title (relating to Provider Responsibility and Mandatory Exclusion, respectively), the substitute physician must be enrolled in Medicaid and not be on the Medicaid or Title XX provider exclusion list. (4) The time period for which a physician may bill for the services of a substitute physician is limited to the following situations: (A) Reciprocal Arrangements. When the substitute physician sees patients in the billing physician's practice under a reciprocal arrangement, the billing physician may bill for services furnished by the substitute physician during a period that does not exceed 14 continuous days. (B) Locum Tenens Arrangements. When the substitute physician sees patients in the billing physician's practice under a locum tenens arrangement, the billing physician may bill for services furnished by the substitute physician during a period that does not exceed 90 continuous days. Except as provided in clause (iii) of this subparagraph, services furnished by the substitute physician after the 90th day must be billed under the substitute physician's own Medicaid provider number. (i) When the billing physician is absent for more than 90 days, the billing physician may bill for services furnished by a different substitute physician for each consecutive continuous 90 day period. (ii) The billing physician may only bill for services furnished by a substitute physician on a temporary basis. Except as provided in clause (iii) of this subparagraph, the billing physician may not bill for services furnished by a substitute physician to address longterm vacancies in a physician practice. (iii) When the billing physician is absent or unavailable due to active duty as a member of a reserve component of the U.S. Armed Forces, the billing physician may bill for the services of a substitute physician for a longer continuous period during all of which the billing physician has been called or ordered to active duty as a member of a reserve component of the Armed Forces. Medicaid may reimburse the billing physician for services provided by the substitute physician until the billing physician is no longer on active duty as a member of a reserve component of the Armed Forces. TRD Karen Ray Chief Counsel Texas Health and Human Services Commission For further information, please call: (512) CHAPTER 363. TEXAS HEALTH STEPS COMPREHENSIVE CARE PROGRAM The Texas Health and Human Services Commission (HHSC) proposes to repeal , , , , , , , , and , concerning Private Duty Nursing Services; and proposes new , , , , , , and , concerning Private Duty Nursing (PDN). Background and Justification The changes to Chapter 363, Subchapter C, address requirements in the Second Partial Settlement Agreement in Alberto N. v. Janek, Section 8.4, under which HHSC must conform its PDN rules to the terms of the settlement agreement. HHSC, the Office of the Texas Attorney General, and the Alberto N. Plaintiffs' counsel negotiated the specific wording of the rules. The proposed rules are the product of that negotiation process and conform HHSC's PDN rules to the terms and conditions of the settlement agreement. Section-by-Section Summary Proposed new establishes the PDN program and stipulates that Medicaid recipients 20 years and younger are entitled to all medically necessary Early and Periodic Screening, Diagnosis, and Treatment services that correct or ameliorate defects and physical and mental illnesses and conditions and that are eligible for federal financial participation. It further clarifies that these rules apply to Medicaid services delivered in either a fee-for-service or managed care delivery model. Proposed new defines the words and terms used in this subchapter. Proposed new establishes the qualifications and program participation requirements for practitioners who provide PDN services in Texas Medicaid. Proposed new defines the medical necessity standard for PDN services. Proposed new describes the benefits available under PDN services as well as limitations on those services. Proposed new describes prior authorization requirements for the provision of PDN services. Proposed new defines the required elements of a PDN plan of care. Fiscal Note PROPOSED RULES May 1, TexReg 2347

4 Greta Rymal, Deputy Commissioner for Financial Services, has determined that during the first five years the proposal is in effect there is no expected impact to costs or revenues of state or local governments to implement and enforce the rule(s) as proposed. There are no anticipated economic costs to persons who are required to comply with the proposed rules. There is no anticipated negative impact on local employment. Small and Micro-Business Impact Analysis HHSC has determined that there is no anticipated adverse effect on small businesses or micro-businesses to comply with the new rules. Public Benefit Chris Traylor, Chief Deputy Commissioner, has determined that for each year of the first five years the proposed rules are in effect, the public will benefit from the adoption of the rules. The anticipated public benefit, as a result of enforcing the proposed rules, will be that HHSC requirements surrounding PDN services will comply with the terms of the Alberto N. settlement agreement. Regulatory Analysis HHSC has determined that this proposal is not a "major environmental rule" as defined by Texas Government Code A "major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risks to human health from environmental exposure and that may adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, or the public health and safety of the state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. Takings Impact Assessment HHSC has determined that this proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code Public Comment Written comments on the proposal may be submitted to Brian Dees, Policy Advisor, Medicaid and CHIP Division, Health and Human Services Commission at 4900 N. Lamar Blvd., MC H-310, Austin, TX 78751; by fax to (512) ; or by to [email protected] within 30 days of publication of this proposal in the Texas Register. Public Hearing A public hearing is scheduled from 9:00 to 10:00 a.m. on May 26, 2015, in the Brown-Heatly Public Hearing Room located at 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) SUBCHAPTER C. PRIVATE DUTY NURSING SERVICES 1 TAC , , , , , , , , (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Health and Human Services Commission or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) Statutory Authority The repeals are proposed under Texas Government Code , which provides the Executive Commissioner of HHSC with broad rulemaking authority; and Texas Human Resources Code and Texas Government Code (a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas. The repeals affect the Texas Human Resources Code Chapter 32 and Texas Government Code Chapters 531. No other statutes, articles, or codes are affected by this proposal Purpose Definitions Provider Participation Requirements Client Eligibility Criteria Medical Necessity Criteria for Private Duty Nursing Private Duty Nursing Benefits and Limitations Plan of Care Termination of Authorization for Private Duty Nursing Services Place of Service. TRD Karen Ray Chief Counsel Texas Health and Human Services Commission For further information, please call: (512) SUBCHAPTER C. PRIVATE DUTY NURSING 1 TAC , , , , , , Statutory Authority The new rules are proposed under Texas Government Code , which provides the Executive Commissioner of HHSC with broad rulemaking authority; and Texas Human Resources Code and Texas Government Code (a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas. The new rules affect the Texas Human Resources Code Chapter 32 and Texas Government Code Chapters 531. No other statutes, articles, or codes are affected by this proposal Purpose. (a) The purpose of this subchapter is to establish rules for private duty nursing services under the federal Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) Program, known in Texas as the Texas Health Steps - Comprehensive Care Program (THSteps-CCP). 40 TexReg 2348 May 1, 2015 Texas Register

5 (b) EPSDT recipients are entitled to all medically necessary EPSDT services that: (1) correct or ameliorate defects and physical and mental illnesses and conditions; and (2) are eligible for federal financial participation. (c) This subchapter applies to Medicaid fee-for-service (FFS) and Medicaid managed care organizations (MCOs) that are contracted with HHSC to provide Medicaid services Definitions. The following words and terms apply only to this subchapter and have the following meanings, unless the context clearly indicates otherwise. (1) Activities of daily living (ADLs)--ADLs include eating, toileting, personal hygiene, grooming, dressing, bathing, transferring, maintaining continence, positioning, and mobility. (2) Contractor--The entity with which HHSC contracts, pursuant to the requirements of the Code of Federal Regulations, Title 42, Part 434. (3) Correct or ameliorate--to improve, maintain, or slow the deterioration of the recipient's health status. (4) Day--A calendar day. (5) Early and Periodic Screening, Diagnosis, and Treatment (EPSDT)--The child and adolescent health component of the Medicaid program for recipients under 21 years of age, defined in the United States Code, Title 42, 1396d(r), and the Code of Federal Regulations, Title 42, (b). EPSDT means screening, vision, dental, hearing, laboratory, health care, treatment, diagnostic services, and other measures necessary to correct or ameliorate defects and physical and mental illnesses and conditions. (6) Federal financial participation (FFP)--The federal government's share of a Medicaid expenditure made by a state agency, as defined in the Code of Federal Regulations, Title 45, (7) HHSC--The Texas Health and Human Services Commission or its designee, including a contractor or MCO. (8) Health Maintenance Activities (HMAs)--Has the meaning assigned by 22 TAC (relating to Definitions) and (relating to Health Maintenance Activities Not Requiring Delegation). (9) Home and Community Support Services Agency (HC- SSA)--A public or private agency or organization licensed by the Texas Department of Aging and Disability Services under 40 TAC Chapter 97 (relating to Licensing Standards for Home and Community Support Services Agencies). (10) Identified contingency plan--a structured process, developed by the recipient or the responsible adult and the Medicaid-enrolled provider, by which a recipient will receive care when a scheduled health care provider is unexpectedly unavailable, as required by 40 TAC (relating to Backup Services and After Hours Care). (11) Instrumental activities of daily living (IADLs)-- IADLs include meal preparation, grocery shopping, light housework, laundry, communication, money management, and assistance with transportation services. (12) Licensed Vocational Nurse (LVN)--An individual who is recognized by the Texas Board of Nursing to practice vocational nursing in Texas at the time and place the service is provided, pursuant to Texas Occupations Code (5) and 22 TAC, Part 11 (relating to Texas Board of Nursing). (13) Medicaid--The Texas Medical Assistance Program, a joint federal and state program provided for in Chapter 32, Texas Human Resources Code, and subject to Title XIX of the Social Security Act, 42 U.S.C et seq. (14) Medicaid managed care organization (MCO)--Any entity with which HHSC contracts to provide Medicaid managed care services and that complies with Chapter 353 of this title (relating to Medicaid Managed Care). (15) Medical Director--HHSC's, its contractor's, or MCO's medical director or associate medical director. (16) Notice--A letter provided by HHSC, its contractor, or MCO to a recipient informing the recipient of any reduction, denial, or termination of a requested service, as described in the Code of Federal Regulations, Title 42, and (17) Physician--A doctor of medicine (MD) or osteopathy (DO) who is recognized by the Texas Medical Board to practice medicine in Texas at the time and place the service is provided, pursuant to Texas Occupations Code (18) Private duty nursing (PDN) Services--Nursing, described by the Texas Occupations Code Chapter 301, and its implementing regulations at 22 TAC, Part 11 (relating to Texas Board of Nursing), when the recipient requires more individual and continuous care than is available from a visiting nurse or than is routinely provided by the nursing staff of a hospital or skilled nursing facility. PDN services include observation, assessment, intervention, evaluation, rehabilitation, care and counsel, or health teachings of a recipient who has a disability or chronic health condition or who is experiencing a change in normal health processes. (19) Private duty nursing services provider--an independently practicing registered nurse, a licensed vocational nurse (LVN) under the supervision of a registered nurse, or a home and community support services agency (HCSSA) enrolled in the Texas Medicaid Program to provide private duty nursing services. (20) Qualified Aide--An aide providing services consistent with the requirements of: (A) 40 TAC Chapter 94 (relating to Nurse Aides); (B) 40 TAC Chapter 95 (relating to Medication Aides- -Program Requirements); or (C) home health aide outlined in 40 TAC Chapter 97 (relating to Licensing Standards for Home and Community Support Services Agencies). (21) Recipient--An individual who is eligible to receive services through the Texas Medicaid Program. (22) Registered Nurse (RN)--An individual who is recognized by the Texas Board of Nursing to practice professional nursing in Texas at the time and place the service is provided, pursuant to the Texas Occupations Code (23) Responsible adult--an individual who is an adult, as defined by the Texas Family Code, who has agreed to accept the responsibility for providing food, shelter, clothing, education, nurturing, and supervision for a recipient who is a minor under the age of 18; or is over 18 years of age and the responsible adult is the managing conservator or legal guardian. Responsible adults include biological parents, adoptive parents, foster parents, guardians, court-appointed managing conservators, and other family members by birth or marriage. (24) Texas Health Steps--Comprehensive Care Program-- Medical, dental, and treatment services available as a federally man- PROPOSED RULES May 1, TexReg 2349

6 dated service for eligible EPSDT Medicaid recipients in Texas under the age of 21 years, pursuant to the EPSDT provision of Title XIX of the Social Security Act, 42 U.S.C. 1396d(r), and the Code of Federal Regulations, Title 42, (b). (25) Treating physician--a physician who provides ongoing medical care of the recipient and ongoing medical supervision of the recipient's plan of care Provider Participation Requirements. (a) PDN services providers must be independently enrolled in the Texas Medicaid Program to be eligible to receive reimbursement for providing private duty nursing services through the Texas Health Steps Comprehensive Care Program. (b) A PDN services provider must: (1) be an RN, an LVN under the supervision of an RN, or a licensed HCSSA; (2) be enrolled in the Texas Medicaid Program; (3) comply with the terms of the Texas Medical Assistance Provider Agreement; (4) agree to provide services in compliance with all applicable federal, state, and local laws and regulations, including the Texas Nursing Practice Act; (5) comply with all applicable state and federal laws and regulations relating to the Texas Medicaid Program; (6) comply with the requirements of the Texas Medicaid Provider Procedures Manual, including all updates and revisions published bimonthly in the Texas Medicaid Bulletin, and all handbooks, standards, and guidelines published by HHSC; and (7) comply with accepted professional standards and principles of nursing practice. (c) In addition to the requirements in subsection (b) of this section, a licensed HCSSA must: (1) comply with Texas Family Code Chapter 261 and Texas Human Resources Code Chapter 48, concerning mandatory reporting of suspected abuse and neglect of children and adults with disabilities; and (2) maintain written policies and procedures for obtaining consent for medical treatment for clients in the absence of the responsible adult that meet the standards of Texas Family Code , relating to Consent by Non-Parent. (d) Provider Notification of Termination of Services. (1) Independently enrolled RNs must provide a recipient at least 30 days written notice of the intent to voluntarily terminate services, except in situations of a potential threat to the nurse's personal safety. (2) An HCSSA must provide a recipient at least five days written notice of its intent to voluntarily terminate services, except as allowed by 40 TAC (relating to Client Transfer or Discharge Notification Requirements) Medical Necessity. (a) PDN services are available to EPSDT-eligible recipients when the services are medically necessary to correct or ameliorate the recipient's disability or physical or mental illness or condition. The services correct or ameliorate when they improve, maintain, or slow the deterioration of the recipient's health status. (b) Medical necessity must be documented in the recipient's prior authorization request Benefits and Limitations. (a) PDN services are a benefit of the Texas Medicaid Program in accordance with the Code of Federal Regulations, Title 42, , relating to PDN services, and (b), relating to EPSDT services. (b) EPSDT recipients are eligible for all PDN services that are medically necessary to correct or ameliorate the recipient's disability and physical and mental illnesses and conditions. (c) The provider requesting PDN services must supply documentation to support the medical need for a private duty nurse. The documentation must also support the number of PDN hours that are medically necessary to correct or ameliorate the recipient's disability and physical and mental illnesses and conditions. (d) EPSDT recipients are eligible for all medically necessary PDN services that are required to meet the recipient's documented PDN needs over the span of time the needs arise, as the needs occur over the course of a 24-hour day. (e) PDN services must be: (1) prescribed by and provided under the direction of a treating physician; (2) included in a plan of care, as described in of this subchapter (relating to Plan of Care); (3) delivered by a Texas Medicaid Program-enrolled PDN services provider; and (4) provided in compliance with all applicable state and federal laws and regulations. (f) services; PDN services are available when an individual: (1) is eligible for EPSDT services; (2) has a treating physician who: (A) issues a prescription or physician's order for PDN (B) reviews and approves an established and maintained plan of care in accordance with of this subchapter; and (C) provides continuing care and medical supervision, including examination or treatment, within 30 days prior to the start of PDN services; and (3) has a responsible adult who resides in the recipient's residence when the recipient is a minor under the age of 18 years or when the recipient is 18 years of age or older with a managing conservator or legal guardian. (g) HHSC may not: (1) require a recipient's responsible adult(s) to provide PDN services to the recipient; (2) require a recipient or a recipient's responsible adult(s) to designate an alternate caregiver to provide PDN services; or (3) deny or reduce the amount of requested PDN services because the recipient's responsible adult(s) is trained and capable of performing such services, but chooses not to do so. (h) HHSC may require providers to instruct and train responsible adults to perform PDN services should an emergency arise, or if the responsible adults voluntarily choose to provide part of the recipient's PDN themselves. 40 TexReg 2350 May 1, 2015 Texas Register

7 (i) The amount of medically necessary PDN services available to recipients will not be capped. (j) PDN services must be provided in a place of service consistent with the requirements in the Code of Federal Regulations, Title 42, , relating to PDN. (k) PDN services may be provided only by an RN or by an LVN who is under the supervision of an RN. (l) PDN services must be prior authorized by HHSC. PDN may be authorized for a period of up to six months. (m) The PDN services provider is notified in writing by HHSC of the approval, reduction, or denial of requested PDN services. (n) PDN services limitations. (1) PDN is considered only when the services are consistent with the definition of "nursing" as described in the Texas Nursing Practice Act or its implementing regulations. PDN services will not be considered for reimbursement if the services are intended solely to provide respite care or child care, or do not directly relate to the recipient's nursing needs. (2) A responsible adult is not eligible for reimbursement for delivering PDN services through the Texas Medicaid Program if he or she is the parent of a recipient who is under the age of 18 or the spouse of the recipient. A responsible adult who is the managing conservator or legal guardian of a recipient over 18 years of age is not eligible for reimbursement. (o) HHSC may deny or reduce PDN hours if the recipient's PDN needs decrease. (p) HHSC may not deny or reduce PDN when the recipient's nursing needs have not decreased Prior Authorization Requirements. (a) PDN services must be prior authorized. Prior authorization is a condition of reimbursement but is not a guarantee of payment. (b) HHSC will publish in the Texas Medicaid Provider Procedures Manual and websites all processes, tools, and scales used to prior authorize PDN services. HHSC may use only these processes, tools, and scales to prior authorize PDN services. (c) The provider must submit a complete request for prior authorization in order to be considered by HHSC for reimbursement. The authorization request must include the authorization form approved by HHSC, signed and dated by the recipient's treating physician. The provider must use the documents, tools, or processes published in the Texas Medicaid Provider Procedures Manual or any updates made available through bulletins, banners, or other means to request prior authorization. (d) Documentation supporting the prior authorization request must clearly and consistently describe the recipient's: (1) current diagnosis; (2) functional status and condition; (3) history and treatment; and (4) frequency and complexity of skilled nursing needs, as those needs arise over the span of a 24-hour day. (e) The supporting documentation: (1) must include: (A) documentation of the treating physician's orders, e.g., a prescription or a written or documented verbal order signed and dated by a treating physician; and (B) a plan of care that satisfies the requirements as described in of this subchapter (relating to Plan of Care); (2) may include any additional materials the provider may choose to submit that supports the medical necessity of the requested PDN services; (3) must explain to HHSC's satisfaction how the requested PDN is necessary to correct or ameliorate the recipient's disability or physical or mental illness or condition; and (4) must show that the recipient's skilled nursing needs cannot be met on a part-time or intermittent basis by a visiting nurse as described in Chapter 354, Subchapter A, Division 3 of this title (relating to Medicaid Home Health Services). (f) Process for authorizations. (1) HHSC authorizes requested PDN services required to meet all of the recipient's PDN needs when the medical necessity for a private duty nurse is documented. (2) HHSC reviews requests for PDN services that comply with subsections (b) through (e) of this section. (3) The information must be complete and consistent throughout the documentation associated with the prior authorization request for PDN services. (4) PDN services are prior authorized with reasonable promptness. Prior authorization determinations are completed by HHSC within three business days of receipt of a complete request. (5) If a request for PDN is incomplete, inconsistent, or unclear, HHSC, its contractor, or MCO will contact the provider to request additional or clarifying documentation to enable HHSC to make a decision on the request. (6) Prior authorizations for PDN services are not denied or reduced based solely on the recipient's diagnosis, type of illness, or health condition. (7) Prior authorizations for PDN services are not denied or reduced solely because the recipient's condition or health status is stable or has not changed. (g) HHSC authorizes requested medically necessary PDN services when: (1) the prior authorization request for PDN is complete, as described in subsections (b) through (e) of this section; (2) the requested services are nursing services as defined by the Texas Nursing Practice Act and its implementing regulations; and (3) no third-party resource, as described in the Texas Medicaid Provider Procedures Manual, is financially responsible for the requested services. (h) HHSC may deny or reduce PDN services when the: (1) request is incomplete; (2) information in the request is inconsistent; (3) documentation does not explain to HHSC's satisfaction the medical need for a private duty nurse or no longer supports the medical need for a private duty nurse; PROPOSED RULES May 1, TexReg 2351

8 (4) documentation does not address how PDN services correct or ameliorate the recipient's disability or physical or mental illness or condition; (5) requested PDN services are not nursing services as defined by the Texas Nursing Practice Act and its implementing regulations; (6) medical director, after conferring with the recipient's treating physician, determines the requested PDN services are not medically necessary to correct or ameliorate the recipient's disability or physical or mental illness or condition; or (7) recipient's nursing needs could be met through a visiting nurse as described in Chapter 354, Subchapter A, Division 3 of this title. (i) Only the medical director may deny PDN services on the basis that the services do not correct or ameliorate the recipient's disability or physical or mental illness or condition. Before denying PDN services, the medical director will contact the recipient's treating physician to determine whether additional information or clarification can be provided that would allow for authorization of PDN services. (j) All notices must afford a recipient an opportunity for a fair hearing in accordance with 42 CFR, Part 431, Subpart E, related to Fair Hearings for Applicants and Recipients. (1) HHSC may determine, based on the information submitted, that PDN services will be denied, terminated, or reduced. A notice regarding the denial, termination, or reduction of PDN services must be sent to the recipient and the requesting provider. The notice must inform the recipient of his or her right to request a fair hearing as described in Chapter 357, Subchapter A of this title (relating to Uniform Fair Hearing Rules). (2) When HHSC determines that the requested services are not PDN services and that the documentation may support authorization of personal care services, as described in Subchapter F of this chapter (relating to Personal Care Services), the denial notice: and (A) describes the basis for this determination; (B) briefly describes the personal care services benefit; (C) explains how to request personal care services. (3) When HHSC determines that documentation for the services requested does not support a request for PDN because the recipient does not need more individual and continuous nursing care than could be provided on a per-visit basis, as described in of this title (relating to General), the denial notice: and (A) describes the basis for this determination; (B) briefly describes the home health nursing benefit; (C) explains how to request prior authorization for home health nursing. (4) When HHSC determines that the request for PDN services is incomplete, as referenced in subsection (h)(1) of this section, the denial notice will inform the recipient that the documentation or information is incomplete and identify the sections of the documentation or information that are incomplete. (5) When HHSC determines that the request for PDN services is inconsistent, as referenced in subsection (h)(2) of this section, the denial notice will inform the recipient that the documentation or information is inconsistent and identify the inconsistencies. (6) When HHSC determines that the request for PDN services does not explain to HHSC's satisfaction the medical need for a private duty nurse or no longer supports the medical need for a private duty nurse as referenced in subsection (h)(3) of this section, the denial notice will inform the recipient and address how the documentation or information does not explain to HHSC's satisfaction the medical need for a private duty nurse or how the documentation no longer supports the medical need for a private duty nurse. (7) When HHSC determines that the information provided does not address how PDN services correct or ameliorate the recipient's disability or physical or mental illness or condition as referenced in subsection (h)(4) of this section, the denial notice will inform the recipient and address how the information provided in the request does not support the medical need for PDN services. (8) When HHSC determines that the requested PDN services are not nursing services as defined by the Texas Nursing Practice Act and its implementing regulations, as referenced in subsection (h)(5) of this section, the denial notice will inform the recipient and address how the requested PDN services are not nursing services as defined by the Texas Nursing Practice Act and its implementing regulations. (9) When an HHSC medical director, after conferring with the recipient's treating physician, determines the requested PDN services are not medically necessary to correct or ameliorate the recipient's disability or physical or mental illness or condition, as referenced in subsection (h)(6) of this section, the denial notice will inform the recipient and address why the requested PDN services are not medically necessary to correct or ameliorate the recipient's disability or physical or mental illness or condition. (10) When HHSC determines that the recipient's nursing needs could be provided by a visiting nurse through Home Health Skilled Nursing services, as referenced in subsection (h)(7) of this section, the denial notice for PDN services will describe the basis for the denial and explain how to request Home Health Skilled Nursing services. (k) A provider's authorization for PDN services is terminated if the recipient is no longer eligible for EPSDT. (l) HHSC may ask a provider to take on an existing authorization for PDN services if it becomes necessary to terminate another provider's authorization for PDN services because the: (1) recipient's health and safety needs are in jeopardy; or (2) PDN services provided are inconsistent with the plan of care submitted for authorization Plan of Care. (a) A plan of care is developed by an RN and represents the treating physician's orders. (b) The plan of care must be established and periodically reviewed by the treating physician in consultation with the provider and the recipient or responsible adult. (c) The plan of care must be: (1) submitted with a request for prior authorization of PDN services; (2) recommended, signed, and dated by the treating physician no more than 30 days from the start of care or 30 days from the end of the prior authorization period; and (3) reviewed and revised by the treating physician with each prior authorization, or more frequently as the treating physician or the PDN services provider deems necessary. 40 TexReg 2352 May 1, 2015 Texas Register

9 (d) A plan of care must include the following elements: (1) a clinical summary that documents active diagnoses and current clinical condition; (2) the recipient's mental or cognitive status; (3) the types of treatments and services, including amount, duration, and frequency; (4) a description of any required equipment and/or supplies; (5) the recipient's prognosis; (6) the recipient's rehabilitation potential; (7) the recipient's current functional limitations; (8) the activities permitted; (9) the recipient's nutritional requirements; (10) the recipient's medications, including dose, route, and frequency; (11) the safety measures to protect against injury; (12) instructions for timely discharge or referral; (13) the date the recipient was last seen by the treating physician; (14) identification of ADLs, IADL, and health-related functions with which the recipient needs assistance. The plan of care must indicate whether the tasks must be performed by a licensed nurse or a qualified aide, or may be performed by a personal care attendant as described in Subchapter F of this chapter (relating to Personal Care Services); (15) a certification statement that an identified contingency plan exists; and (16) all other medical orders. TRD Karen Ray Chief Counsel Texas Health and Human Services Commission For further information, please call: (512) TITLE 7. BANKING AND SECURITIES PART 5. OFFICE OF CONSUMER CREDIT COMMISSIONER CHAPTER 89. PROPERTY TAX LENDERS The Finance Commission of Texas (commission) proposes amendments to , , and , concerning Property Tax Lenders. In general, the purpose of the proposal is to provide guidelines for charging legitimate discount points in connection with property tax loans. The proposed amendments replace a portion of a previously adopted rule that prohibited discount points in (d), which appeared in the March 6, 2015, issue of the Texas Register (40 TexReg 1068). The agency originally received informal pre-comments on property tax loan discount points at a stakeholder meeting held in September Stakeholders also provided official comments regarding property tax loan discount points in response to proposed rule amendments that appeared in the October 31, 2014, issue of the Texas Register (39 TexReg 8484) and the December 26, 2014, issue of the Texas Register (39 TexReg 10122). The commission has considered these official comments and informal pre-comments in developing the current proposal. During the official comment period, stakeholders are welcome to resubmit any comments on issues not incorporated into the proposal. I. Requirements for charging legitimate discount points The proposed amendments to , concerning Files and Records Required, add clause (x) to paragraph (3)(A) concerning the property tax loan transaction file. The proposed amendments specify that a property tax lender must maintain written documentation of discount points offered to the property owner, including a written proposal that includes a contract rate without discount points and a lower contract rate based on discount points. The proposed amendments to , concerning Fees for Closings Costs, are contained in subsection (d). The proposed amendments to (d) address the charging of legitimate discount points in connection with a property tax loan. Subsection (d) states that legitimate discount points are not subject to the general maximum fee limit for property tax loan closing costs. Paragraph (1) explains that in order for discount points to be legitimate, they must truly correspond to a reduced interest rate, they cannot be necessary to originate the loan, and the borrower must be provided with a written proposal that includes a contract rate without discount points and a lower contract rate based on discount points. New (d)(2) states that any discount point or other origination fee that does not meet the definition in paragraph (1) will be subject to the general maximum fee limit. New (d)(3) specifies that legitimate discount points must be included in the calculation of the effective rate and upon prepayment in full, must be spread as per Texas Finance Code, New (d)(4) specifies that discount points must be paid by the borrower at or before closing of the loan, and that discount points may not be included in the funds advanced or principal balance. New (d)(5) specifies that a lender may not finance discount points through a promissory note or contract payable to the property tax lender or an affiliated business. The proposed amendments to , concerning Payoff Statements, add subparagraph (C) to paragraph (9) concerning the itemization of the total payoff amount. The amendments to further clarify that any refunds resulting from unearned legitimate discount points must be itemized on the payoff statement. The primary purpose of the amendments is to describe the requirements for charging legitimate discount points. These provisions are intended to ensure transparency in connection with discount points and to enable the borrower to make an informed decision before closing. Texas courts have generally held discount points to be a form of prepaid interest. See, e.g., Fin. Comm'n of Tex. v. Norwood, 418 S.W.3d 566, 596 (Tex. 2013) (holding that legitimate discount points are interest and are not subject to PROPOSED RULES May 1, TexReg 2353

10 the Texas Constitution's 3% cap on fees necessary to originate a home equity loan); Tarver v. Sebring Capital Credit Corp., 69 S.W.3d 708, 713 (Tex. App.--Waco 2002, no pet.) (holding the same). Like other forms of prepaid interest, discount points must be spread over the term of the loan in order to determine whether the loan is usurious. See Tex. Fin. Code ; Tanner Dev. Co. v. Ferguson, 561 S.W.2d 777, (Tex. 1977). However, in order to be legitimate, discount points must be an option available to the borrower, rather than a fee necessary to originate the loan. See Norwood, 418 S.W.3d at 596 (explaining that "true discount points are not fees 'necessary to originate, evaluate, maintain, record, insure, or service' but are an option available to the borrower"). In addition, paragraphs (4) and (5) help ensure that property tax lenders comply with the limitation on funds advanced in Texas Tax Code, 32.06(e), which provides: "A transferee holding a tax lien transferred as provided by this section may not charge a greater rate of interest than 18 percent a year on the funds advanced. Funds advanced are limited to the taxes, penalties, interest, and collection costs paid as shown on the tax receipt, expenses paid to record the lien, plus reasonable closing costs." This provision distinguishes between interest that the property tax lender may charge and funds that the property tax lender may advance to the borrower. Funds advanced are expressly limited to the six items listed in the second sentence of 32.06(e). The interest that the property tax lender can charge is described in the first sentence of 32.06(e), and is not part of the funds advanced. There is no indication in 32.06(e) that a property tax lender may charge interest on its own interest. See William C. Dear & Assocs., Inc. v. Plastronics, Inc., 913 S.W.2d 251, 254 (Tex. App.--Amarillo 1996, writ denied) (interpreting a usury statute to prohibit compounding of interest where it was not expressly authorized). For this reason, discount points (as a form of prepaid interest) are not part of the funds advanced under Texas Tax Code, 32.06(e), and should not be included in the principal balance of the loan, as specified in paragraph (4). In addition, paragraph (5) specifies that a lender may not circumvent this requirement by entering into a promissory note or contract for the payment of discount points. II. Benefits, costs, and impact on small businesses Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that for the first five-year period the amended rules are in effect there will be no fiscal implications for state or local government as a result of administering the amendments. Commissioner Pettijohn has determined that for each year of the first five years the amended rules are in effect the public benefit anticipated will be that the commission's rules will provide updated guidelines regarding the costs allowed for property tax loans, and will provide more consistency in the transfer of tax liens. Additional benefits of the proposal include enhanced transparency regarding the use of discount points and reduced confusion on the part of property owners. Certain property tax lenders may incur economic costs in order to comply with the prohibition on financing discount points. However, the commission estimates that these costs will be minimal. Many property tax lenders will be unaffected by the proposed amendments, because they do not currently charge discount points. However, the comments on the December 2014 re-proposal of discount point provisions indicated that a segment of small property tax lenders relies exclusively on closing costs and discount points to compensate the lenders for all origination costs, and that these lenders include discount points in the funds advanced. These lenders will have to adjust their pricing practices in order to comply with the proposed amendments and Tax Code, 32.06(e). Ultimately, the commission estimates that the impact on these lenders will be minimal, because they should be able to recoup these costs through other methods, such as charging a higher interest rate and ensuring that they are able to retain a portion of that interest rate. Because many lenders currently operate without charging discount points, the commission believes that the segment of property tax lenders referenced earlier will be able to adjust their practices to comply with the amendments and the Tax Code. The costs on these lenders are imposed primarily by the statutory limitations on interest and funds advanced in Tax Code, 32.06(e), rather than the proposed rule changes. The commission is unaware of any property tax lenders that charge discount points in a manner that complies with Tax Code, 32.06(e), but if these lenders exist, the costs on them will be limited to printing brief disclosures on discount points and providing them to property owners. The proposed amendments may have an impact on some small and micro-businesses. However, the commission estimates that this impact will be minimal. Many small property tax lenders will be unaffected by the proposed amendments, because they do not currently charge discount points. However, the comments on the December 2014 re-proposal of discount point provisions indicated that a segment of small property tax lenders relies exclusively on closing costs and discount points to compensate the lenders for all origination costs, and that these lenders include discount points in the funds advanced. These lenders will have to adjust their pricing practices in order to comply with the amendments and Tax Code, 32.06(e). Ultimately, the commission estimates that the impact on these lenders will be minimal, because they should be able to recoup these costs through other methods, such as charging a higher interest rate and ensuring that they are able to retain a portion of that interest rate. Because many lenders currently operate without charging discount points, the commission believes that the segment of small property tax lenders referenced earlier will be able to adjust their practices to comply with the amendments and the Tax Code. The impact on these lenders is imposed primarily by the statutory limitation on interest and funds advanced in Tax Code, 32.06(e), rather than the proposed rule changes. The commission is unaware of any small property tax lenders that charge discount points in a manner that complies with Tax Code, 32.06(e), but if these small lenders exist, the impact on them will be limited to printing brief disclosures on legitimate discount points and providing them to property owners. After the December re-proposal, five commenters argued that the amendments would disproportionately affect small businesses. One commenter stated: "As a small originator in an extremely competitive market, it is necessary for [the commenter], and many other small originators, to utilize investment capital from larger firms to offer flexible property tax loans to homeowners so they will not lose their homes. Without our own funding capabilities, we rely on the origination fees and discount points to be able to meet our financial obligations in running our businesses." Another commenter stated: "As a small business that depends on origination profits we are unable to originate loans at a loss unlike large players in the marketplace... which in some cases are publicly held companies that are happy to originate loans at a loss and then make up for it in profits from the interest rate spread they enjoy from those assets." Another commenter stated: "Evidence shows that competition has lowered the average closing costs to a level that is below the 40 TexReg 2354 May 1, 2015 Texas Register

11 true cost of origination. It is one thing for a business to choose to take a loss on origination (at least for a time) for a competitive advantage. It is quite another to force all originators to operate at a loss in originations. To do so will drive most originators out of business who do not meet a certain business profile, i.e. large, established originators with access to institutional or extremely cheap financing who originate and own their own loans. Such an originator is able to capitalize their losses in their origination arm and make it up in the interest rate spread over the life of the loan. A small originator without access to cheap investment capital or who sells their loans must make a profit at origination or they will be forced to close their doors." These commenters have stated that they rely on closing costs and discount points to compensate them for the costs of origination. But closing costs and discount points are not intended to cover all costs of origination. Closing costs are intended to cover costs that arise between the loan application and closing, and discount points, in transactions where they are permitted, should be an optional offset that enables a borrower to obtain a lower interest rate than the standard par rate offered by the lender. Therefore, in order to comply with the proposed amendments, these lenders may have to adjust their pricing practices. These lenders may have to recoup their origination costs by charging a higher interest rate and ensuring that they are able to retain a portion of that higher interest rate. It appears that there is room for them to do so; two of the commenters stated that they charge fixed interest rates between 9.90% and 10%, well below the 18% maximum. After making this adjustment, these small lenders will still be able to recover their costs and effectively receive the same stream of payments, but the amounts they charge for closing costs will more accurately reflect costs actually related to closing. The commission disagrees with the contention that the amendments will force lenders to operate at a loss. Some commenters emphasized that the combination of a $900 closing cost cap in (c) (adopted by the commission in February 2015) and a prohibition on financing discount points would put certain small property tax lenders out of business. For example, one commenter stated: "Lowering origination fees to $900 and in effect eliminating discount points would put us out of business." Another commenter stated that "to further reduce origination fees beyond the current well thought out guidelines and to, in effect, eliminate discount points, will create an injustice to the property owners by putting them more at risk in the long run with fewer options to assist them with their property taxes which will increase their cost and risk of losing their property." Again, the commission disagrees with the contention that the amendments will force lenders to operate at a loss, because of the alternative pricing structures available to lenders. The commission believes that small-business-related exceptions to the amendments would be legally infeasible and would not accomplish the objectives of the amendments. First, exempting small businesses from the prohibition on financing discount points would fail to ensure that these small businesses charge legitimate discount points in compliance with the limitations on interest and funds advanced in Tax Code, 32.06(e). Second, along the same lines, simply omitting the discount point provisions in (d) would fail to ensure that property tax lenders charge legitimate discount points in compliance with the limitations on interest and funds advanced. Third, the commission also considered including the requirements in paragraphs (1), (2), and (3), and omitting the prohibition on financing discount points in paragraphs (4) and (5). However, this approach would fail to ensure that property tax lenders comply with the limitation on funds advanced in Tax Code, 32.06(e). The agency estimates that 75 small businesses or micro-businesses will be subject to the proposed rule amendments. This estimate is based on the number of property tax lenders that filed an annual report in 2014 stating that they had total annual income less than $6 million. However, most of these companies do not charge discount points and will therefore be unaffected by the amendments. The agency estimates that five property tax loan companies will be affected by the proposed amendments because they engage in the practice described earlier (i.e., relying on closing costs and discount points to compensate the lender for all origination costs, and assigning the loan to another party). This estimate is based on the number of property tax lenders that filed an annual report in 2014 stating that they made loans but did not have any loan receivables. The agency estimates that all five of these affected companies are small or micro-businesses, based on the total income they provided in the annual reports that they filed in If these lenders are including discount points in the funds advanced, then they will have to amend their pricing practices in order to comply with the proposed amendments and Tax Code, 32.06(e). The precise amount of the amendments' economic cost depends partly on information that the agency does not have. For example, the agency does not know how many secondary-market participants will be willing to purchase loans from small originators on terms that comply with the proposed amendments. Nonetheless, the commission believes that the economic costs and the impact on small businesses will be minimal. As outlined in the previous discussion, the property tax lenders that currently rely exclusively on closing costs and discount points should be able to recover their costs and effectively receive the same stream of payments by charging higher interest rates. So it is unclear why secondary-market participants would refuse to purchase the loans on terms that allow the lenders to recover substantially the same costs that they recover today. The commission invites additional comments on the proposed amendments' economic costs in general and their impact on small businesses in particular. III. Conclusion Comments on the proposal may be submitted in writing to Laurie Hobbs, Assistant General Counsel, Office of Consumer Credit Commissioner, 2601 North Lamar Boulevard, Austin, Texas or by to [email protected]. To be considered, a written comment must be received on or before the 31st day after the date the proposal is published in the Texas Register. At the conclusion of the 31st day after the proposal is published in the Texas Register, no further written comments will be considered or accepted by the commission. SUBCHAPTER B. AUTHORIZED ACTIVITIES 7 TAC The amendments are proposed under Texas Finance Code, , which authorizes the commission to adopt rules to ensure compliance with Texas Finance Code, Chapter 351 and Texas Tax Code, Additionally, the amendments are proposed under Texas Finance Code, , which authorizes the Finance Commission to adopt rules to enforce Title 4 of the Texas Finance Code. PROPOSED RULES May 1, TexReg 2355

12 The amendments are also proposed under 32.06(a-4)(2) of the Tax Code, which authorizes the commission to adopt rules relating to the reasonableness of closing costs, fees, and other charges permitted under The statutory provisions affected by the proposed amendments are contained in Texas Finance Code, Chapter 351, and Texas Tax Code, Files and Records Required. Each licensee must maintain records with respect to each property tax loan made under Texas Finance Code, Chapter 351 and Texas Tax Code, and , and make those records available for examination under Texas Finance Code, The records required by this section may be maintained by using either a paper or manual recordkeeping system, electronic recordkeeping system, optically imaged recordkeeping system, or a combination of the preceding types of systems, unless otherwise specified by statute or regulation. If federal law requirements for record retention are different from the provisions contained in this section, the federal law requirements prevail only to the extent of the conflict with the provisions of this section. (1) - (2) (No change.) (3) Property tax loan transaction file. A licensee must maintain a paper or imaged copy of a property tax loan transaction file for each individual property tax loan or be able to produce the same information within a reasonable amount of time. The property tax loan transaction file must contain documents that show the licensee's compliance with applicable law, including Texas Finance Code, Chapter 351; Texas Tax Code, and , and any applicable state and federal statutes and regulations. If a substantially equivalent electronic record for any of the following documents exists, a paper copy of the record does not have to be included in the property tax loan transaction file if the electronic record can be accessed upon request. The property tax loan transaction file must include copies of the following records or documents, unless otherwise specified: (A) For all property tax loan transactions: (i) - (ix) (No change.) (x) written documentation of any legitimate discount points offered to the property owner, as described by (d) of this title, including the written proposal described by (d)(1)(C); (B) - (M) (No change.) (4) - (9) (No change.) Filed with the Office of the Secretary of State on April 17, TRD Leslie L. Pettijohn Commissioner Office of Consumer Credit Commissioner For further information, please call: (512) SUBCHAPTER F. COSTS AND FEES 7 TAC The amendments are proposed under Texas Finance Code, , which authorizes the commission to adopt rules to ensure compliance with Texas Finance Code, Chapter 351 and Texas Tax Code, Additionally, the amendments are proposed under Texas Finance Code, , which authorizes the Finance Commission to adopt rules to enforce Title 4 of the Texas Finance Code. The amendments are also proposed under 32.06(a-4)(2) of the Tax Code, which authorizes the commission to adopt rules relating to the reasonableness of closing costs, fees, and other charges permitted under The statutory provisions affected by the proposed amendments are contained in Texas Finance Code, Chapter 351, and Texas Tax Code, Fees for Closing Costs. (a) - (c) (No change.) (d) Discount points. Legitimate discount points are prepaid interest and are not subject to the general maximum fee limit described by subsection (c) of this section. (1) Discount points are legitimate if: (A) the discount points truly correspond to a reduced interest rate; (B) the discount points are not necessary to originate the loan; and (C) before closing, the property tax lender provides the property owner with a written proposal describing the options offered to the property owner, including all of the following: (i) an offer of a property tax loan that includes a contract rate without discount points and a corresponding annual percentage rate; (ii) an offer of a property tax loan that includes a lower contract rate based on discount points and a corresponding annual percentage rate; (iii) the difference between the contract rate without discount points and the lower contract rate, expressed as a percentage or as a number of points; (iv) the cost of the discount points expressed as a dollar amount; (v) the percentage amount equal to the cost of the discount points divided by the principal balance of the loan; and (vi) a statement that discount points are voluntary and not required to be paid in order to obtain the loan. (2) If a property tax lender directly or indirectly charges, contracts for, or receives a discount point or other origination fee at closing that is not a legitimate discount point under paragraph (1) of this subsection, then the point or fee is subject to the maximum fee limit described by subsection (c) of this section. A property tax lender may not use the term "discount point" to describe a fee other than a legitimate discount point. (3) To determine whether a property tax loan exceeds the 18% maximum effective rate of interest described in Texas Tax Code, 32.06(e), legitimate discount points must be included in the calculation of the effective rate. Upon prepayment in full, a property tax lender must spread legitimate discount points in accordance with Texas Finance Code, TexReg 2356 May 1, 2015 Texas Register

13 (4) All legitimate discount points must be paid by the property owner by cash, check, or electronic funds transfer before or at closing of a property tax loan. Discount points may not be included in the funds advanced described by Texas Tax Code, 32.06(e), or in the principal balance upon which interest is calculated. (5) A property tax lender may not finance any discount points through a separate promissory note or contract, if the note or contract is payable to the property tax lender or to an affiliated business of the property tax lender. [(d) Discount points. A property tax lender may not charge any discount points in connection with a property tax loan. A property tax lender may not use the term "discount point" to describe any fee or charge in connection with a property tax loan. This prohibition applies to all property tax loans, notwithstanding subsection (a).] Filed with the Office of the Secretary of State on April 17, TRD Leslie L. Pettijohn Commissioner Office of Consumer Credit Commissioner For further information, please call: (512) SUBCHAPTER H. PAYOFF STATEMENTS 7 TAC The amendments are proposed under Texas Finance Code, , which authorizes the commission to adopt rules to ensure compliance with Texas Finance Code, Chapter 351 and Texas Tax Code, Additionally, the amendments are proposed under Texas Finance Code, , which authorizes the Finance Commission to adopt rules to enforce Title 4 of the Texas Finance Code. The amendments are also proposed under 32.06(a-4)(2) of the Tax Code, which authorizes the commission to adopt rules relating to the reasonableness of closing costs, fees, and other charges permitted under The statutory provisions affected by the proposed amendments are contained in Texas Finance Code, Chapter 351, and Texas Tax Code, Payoff Statements. (a) - (b) (No change.) (c) Required elements. A payoff statement under this section must include: (1) - (8) (No change.) (9) an itemization of the total payoff amount, which must include: (A) the unpaid principal balance on the property tax loan; (B) the accrued interest as of the balance date; [and] (C) any refundable amount resulting from unearned legitimate discount points described by (d) of this title (relating to Fees for Closing Costs); and (D) [(C)] any other fees that are part of the total amount due under the property tax loan, with a specific description for each fee; (10) - (13) (No change.) (d) - (l) (No change.) Filed with the Office of the Secretary of State on April 17, TRD Leslie L. Pettijohn Commissioner Office of Consumer Credit Commissioner For further information, please call: (512) TITLE 10. COMMUNITY DEVELOPMENT PART 1. TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS CHAPTER 1. ADMINISTRATION The Texas Department of Housing and Community Affairs (the "Department") proposes new 10 TAC Chapter 1, Subchapter C, , and the repeal of Subchapter A, 1.5, concerning Previous Participation. The purpose of this new subchapter is to replace the Department's existing previous participation rule which is currently found in 10 TAC 1.5 and which is proposed for repeal in this rulemaking proposal. Previous Participation reviews are the process used by the Department to evaluate an applicant's compliance history prior to awarding funds or entering into contracts. The new rules are proposed to accomplish the following: Section describes the process that will be used for multifamily awards and ownership transfers. The proposed rule introduces a new concept of categorizing applications. Category 1 and 2 applications are presumed to have an acceptable compliance history. Category 3 and 4 applications are those with past compliance issues that will be reviewed by the Department's Executive Award Review Advisory Committee ("EARAC") prior to making recommendations to the Department's Board. The rule provides a process for applicants to be notified of their status and offer terms and conditions to mitigate past compliance issues. Section describes the process that will be used for the Department's formula funded Community Affairs programs. The rule provides an opportunity for subrecipients to comment on their compliance history and be notified regarding EARAC's recommendations. Section describes the process that will be used for all other Department programs not covered in and The process is very similar to the process outlined in and provides an opportunity for applicants to comment on their compliance history and be notified of EARAC's recommendations. PROPOSED RULES May 1, TexReg 2357

14 Section provides an opportunity and process for applicants and subrecipients to appeal a recommendation made by EARAC. FISCAL NOTE. Timothy K. Irvine, Executive Director, has determined that, for each year of the first five years the proposed new rules and repeal are in effect, enforcing or administering the proposed new rules and repeal does not have any foreseeable implications related to costs or revenues of the state or local governments. PUBLIC BENEFIT/COST NOTE. Mr. Irvine also has determined that, for each year of the first five years the proposed new rules and repeal are in effect, the public benefit anticipated as a result of the proposed new rules and repeal will be an increased ability for potential applicants to know and understand their compliance status with the Department. There will not be any additional new economic cost to individuals required to comply with the proposed new rules or the repeal. ADVERSE IMPACT ON SMALL OR MICRO-BUSINESSES. The Department has determined that there will not be any additional economic effect on small or micro-businesses based on the proposed new rules or proposed repeal. REQUEST FOR PUBLIC COMMENT. The public comment period will be held May 1, 2015, through June 1, 2015 to receive input on the proposed rules and proposed repeal. Written comments may be submitted to the Texas Department of Housing and Community Affairs, Patricia Murphy, Rule Comments, P.O. Box 13941, Austin, Texas or by fax to (512) ALL COMMENTS MUST BE RECEIVED BY 5:00 P.M. JUNE 1, SUBCHAPTER A. GENERAL POLICIES AND PROCEDURES 10 TAC 1.5 (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Texas Department of Housing and Community Affairs or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY. The repeal is proposed pursuant to Texas Government Code, , which authorizes the Department to adopt rules. The proposed repeal affects no other code, article, or statute Previous Participation. Filed with the Office of the Secretary of State on April 17, TRD Timothy K. Irvine Executive Director Texas Department of Housing and Community Affairs For further information, please call: (512) SUBCHAPTER C. PREVIOUS PARTICIPATION 10 TAC STATUTORY AUTHORITY. The new rules are proposed pursuant to Texas Government Code, , which authorizes the Department to adopt rules. The proposed rules affect no other code, article, or statute Previous Participation Reviews for Multifamily Awards and Ownership Transfers. (a) General. Prior to awarding funds or other assistance through the Department's Multifamily Housing Programs or approving an entity to acquire an existing multifamily Development monitored by the Department a previous participation review will be performed. When conducting a previous participation review: (1) Events of noncompliance that were corrected over three (3) years ago are not taken into consideration unless required by federal or state law or by court order or voluntary compliance agreement. (2) Events of noncompliance with an "out of compliance date" prior to the applicant's or proposed incoming owner's period of control are not taken into consideration if the event(s) are currently corrected, regardless of whether or not they were corrected during the corrective action period. (3) Events of noncompliance with an "out of compliance date" prior to the Applicant's or proposed incoming owner's period of control are taken into consideration if the event(s) are currently uncorrected. (4) The following events of noncompliance will not be taken into consideration: (A) "Failure to provide Fair Housing Disclosure notice" to households that have vacated if the date of noncompliance was within the first six (6) months of calendar year 2013; (B) "Household income above the income limit upon initial occupancy" for units at properties participating in U.S. Department of Housing and Urban Development programs if the household resided in the unit prior to an allocation of Department funds and Federal Regulations prevent the owner from correcting the issue; and (C) "Casualty loss" if the restoration period has not expired. (5) If the applicant or any affiliate of the applicant is required to have a Single Audit, the Compliance Division will advise the Executive Award Review Advisory Committee ("EARAC") of Single Audit Findings and events of noncompliance identified by the Community Affairs Monitoring and/or Contract Monitoring Sections of the Compliance Division. (6) Applicants or proposed incoming owners must complete the Department's Uniform Previous Participation Review Form and respond to staff inquiries regarding apparent errors or omissions. If an applicant or proposed incoming owner fails to provide this form this failure shall be reported to EARAC. (b) Definitions. The following definitions apply only as used in this section. Other capitalized terms used in this section shall have the meaning ascribed in chapter 10 of this title. (1) Extra Large Portfolios--Applications in which the Applicant and its Affiliates collectively Control more than twenty (20) Developments; (2) Large Portfolios--Applications in which the Applicant and its Affiliates collectively Control thirteen (13) to nineteen (19) Developments; 40 TexReg 2358 May 1, 2015 Texas Register

15 (3) Medium Portfolios--Applications in which the Applicant and its Affiliates collectively Control six (6) to twelve (12) Developments; (4) Monitoring Event--Means an onsite or desk monitoring review, a Uniform Physical Condition Standards inspection, the submission of the Annual Owner's Compliance Report, or any other instance when the Department's Compliance Division provides written notice to an owner requesting a response by a certain date (e.g., responding to a tenant complaint); Example 1.301(1): A Development was monitored in 2011 and During both monitoring visits, Department staff identified units that were occupied by ineligible households. At the time of the previous participation review, all identified events of noncompliance have been corrected. However, some of the units from the 2011 and some of the units from the 2014 onsite file review were not corrected during the corrective action period. Although the same finding was cited, it would be considered two events of noncompliance. (5) Portfolio Sizes--Refers collectively to Small Portfolios, Medium Portfolios, Large Portfolios and Extra Large Portfolios; (6) Small Portfolios--Applications in which the Applicant and its Affiliates collectively Control five (5) or fewer Developments. (c) Determination of Compliance Status. Through a review of the form and the compliance history of the affiliated multifamily Developments, staff will determine the applicable category for the application or ownership transfer request using the criteria in paragraphs (1) - (4) of this subsection and EARAC will recommend appropriate remedies, actions, and/or conditions in accordance with subsection (d) of this section. The application will be classified in the highest applicable category. Example 1.301(2): If an application is category 1 for a particular issue but meets the standard to be classified as category 4 for another issue or issues, then the application shall be considered a category 4 application under this section. (1) Category 1. For all Portfolio Sizes, the Developments affiliated with the application have no issues that are currently uncorrected and no events of noncompliance that were not corrected during the corrective action period. (2) Category 2. (A) Small Portfolios. The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period equals one (1). (B) Medium Portfolios. The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is more than zero (0) but fewer than three (3). (C) Large Portfolios. The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is more than zero (0) but five (5) or fewer. (D) Extra Large Portfolios. The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is more than zero (0) but less than seven (7). (3) Category 3. (A) Small Portfolios. The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is more than one (1) but fewer than six (6). (B) Medium Portfolios. The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is more than two (2) but fewer than eight (8). (C) Large Portfolios. The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is more than five (5) but fewer than eleven (11). (D) Extra Large Portfolios. The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is more than six (6) but fourteen (14) or fewer. (E) For all Portfolio Sizes: (i) There are three (3) or fewer events of noncompliance that are currently uncorrected at the developments affiliated with the application. If corrective action has been uploaded to the Department's Compliance Monitoring and Tracking System ("CMTS") it will be reviewed before this determination is made; however, evidence of corrective action submitted during the five day period referenced in subsection (d) of this section will not be considered; (ii) No response was received during the corrective action period for three (3) or fewer monitoring events that occurred within the last three (3) years; or (iii) A Development affiliated with the application that is or was controlled by the applicant or proposed incoming owner has been the subject of a final order and the terms have not been violated. (4) Category 4. (A) Small Portfolios: The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is six (6) or more; (B) Medium Portfolios: The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is eight (8) or more; (C) Large Portfolios: The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is eleven (11) or more; (D) Extra Large Portfolios. The number of events of noncompliance that are uncorrected plus the number of events of noncompliance that were not corrected during the corrective action period is fifteen (15) or more. (E) For all Portfolio Sizes: (i) There are more than three events of noncompliance that are uncorrected at the Developments affiliated with the application. If corrective action has been uploaded to CMTS it will be reviewed before this determination is made, however, evidence of corrective action submitted during the five day period referenced in subsection (d) of this section will not be considered; (ii) No response was received during the corrective action period for more than three (3) monitoring events that occurred within the last three (3) years; (iii) A Development affiliated with the application that is or was controlled by the applicant or proposed incoming owner has been the subject of a final order and the terms have been violated; PROPOSED RULES May 1, TexReg 2359

16 (iv) The applicant or proposed incoming owner failed to meet the terms and conditions of a prior approval imposed by the EARAC, the Governing Board, voluntary compliance agreement, or court order; (v) Payment of principal or interest on a loan due to the Department is past due beyond any grace period provided for in the applicable loan documents; (vi) The Department has requested and not been provided evidence that the owner has maintained required insurance on any collateral for any loan held by the Department; (vii) The Department has requested and not been provided evidence that property taxes have been paid or satisfactory evidence of a tax exemption on any collateral for any loan held by the Department; or (viii) Fees or other amounts owed to the Department are thirty days or more past due. (d) EARAC Review. After determining the appropriate category, EARAC will review the previous participation in accordance with the following paragraphs, as applicable. (1) Category 1. The compliance history of category 1 applications will be deemed acceptable by EARAC without further review or discussion. (2) Category 2. The compliance history of category 2 applications will be deemed acceptable by EARAC without further review or discussion and the Governing Board will be advised of category 2 applications that are recommended for award. (3) Categories 3 and 4. (A) Prior to EARAC review, the applicant or proposed incoming owner will be provided a five (5) business day period to review the documentation that will be provided to EARAC and provide written comment or propose conditions or mitigations; (B) The compliance history will be reviewed by EARAC for a recommendation to award or award with conditions. In making this decision, EARAC may request any other information from the Compliance Division that is documented in the compliance history with the exception of events of noncompliance precluded by Texas Government Code (e); (C) Any award recommendations will be conditioned on the correction of any uncorrected events of noncompliance by dates agreed upon by the applicant or proposed incoming owner and EARAC. In addition, recommendation and approval may be subject to other terms and conditions related to the applicant's or incoming owner's compliance history. Failure to correct events of noncompliance by agreed upon dates and/or meet terms and conditions related to a recommendation or award will be reconsidered by EARAC and awards may be recommended for denial or recession. (4) Category 4. Applications will be notified of their status and if they wish to pursue the award should be prepared to propose terms and conditions specific to their compliance history, along with identifying specific dates to correct uncorrected events. EARAC may accept, modify or reject the applicant's proposal. If the proposal is modified or rejected, the applicant may appeal in accordance with of this subchapter Previous Participation Reviews for CSBG, LIHEAP, and WAP. (a) Previous Participation Reviews for annual non-competitive contracts funded through the U.S. Department of Health and Human Services' Community Service Block Grant Program ("CSBG"), the Low Income Housing Energy Assistance Program ("LIHEAP") and the Department of Energy Weatherization Assistance Program ("WAP") will be conducted in connection with the preparation of the applicable State Plan to be submitted to the appropriate federal agency. (b) Capitalized terms used in this section shall have the meaning ascribed in Chapter 5 of this title. (c) Any entity that the Department may enter into a contract with will be required to submit: (1) A listing of its current board of directors, council, or other governing bodies as applicable; (2) A list of the Subrecipient's key personnel (Executive Director, CFO, program director) and the length of time they have been in that position and employed by the Subrecipient; (3) Identification of the client tracking and financial management system or software used by the Subrecipient and the length of time that the entity has been utilizing these systems; (4) Any pending state or federal litigation (including administrative proceedings) against the Subrecipient along with any final decrees within the last three years; (5) A list of any multifamily Developments owned or Controlled by the Subrecipient that are monitored by the Department; and (6) Identification of all Department programs that the Subrecipient has participated in within the last three years. (d) Subrecipients will be provided a reasonable period of time, but not less than five business days, to provide the requested information. (e) The Subrecipient's financial obligations to the Department will be reviewed to determine if any of the following deficiencies exist: (1) Payment of principal or interest on a loan due to the Department is past due beyond any grace period provided for in the applicable loan documents; (2) The Department has requested and not been provided evidence that the Subrecipient has maintained required insurance on any collateral for any loan held by the Department; (3) The Department has requested and not been provided evidence that property taxes have been paid or satisfactory evidence of a tax exemption on any collateral for any loan held by the Department; or (4) Fees or other amounts owed to the Department which are thirty days or more past due. (f) The information provided by the Subrecipient, the results of the most recent Single Audit, any deficiencies identified in subsection (d) of this section and all findings identified during any monitoring visits conducted within the last three years (whether or not the findings were corrected during the corrective action period) will be taken into consideration to: (1) Prepare the monitoring plan, including the identification of the contracts that will be monitored under the funds provided through the state plan; (2) Identify if applicable, any element that will be monitored for all contracts; (3) Identify any recommended special contract terms and conditions; (4) Identify any "Network wide" training that will be offered; and 40 TexReg 2360 May 1, 2015 Texas Register

17 (5) Identify any CSBG eligible entity that will be required to prepare and submit a Quality Improvement Plan ("QIP"). (g) If any deficiencies in subsection (d) of this section are identified, or if the most recent Single Audit contained findings or if there have been any monitoring findings identified during the last three years, the Subrecipient will be notified that EARAC will be informed of such issues (with the exception of events of noncompliance precluded by Texas Government Code (e)). The Subrecipient will be provided a five business day period to provide written comment or propose conditions or mitigations. Although there will be an opportunity to respond and comment within the five day period, a response is not required. (h) The list of Subrecipients along with summary information regarding monitoring, (with the exception of events of noncompliance precluded by Texas Government Code (e)), Single Audit and any deficiencies identified in subsection (d) of this section will be presented to EARAC. EARAC may request any other information from the Compliance Division that is documented in the compliance history with the exception of events of noncompliance precluded by Texas Government Code (e). (i) EARAC can recommend award, denial or award with conditions. (j) Any Subrecipient who will be recommended for denial or award with conditions or any CSBG eligible entity that will be required to submit a Quality Improvement Plan will be informed in writing and will be required submit a written response or propose conditions or mitigations. An additional five business days will be provided to submit the written response or proposed conditions or mitigations. If the Subrecipient's response does not result in EARAC recommending award with no conditions or award with conditions that the Subrecipient agrees to, the Subrecipient will have the opportunity to appeal EARAC's recommendation in accordance with of this subchapter. (k) Although funds may be reserved for the Subrecipient or the Subrecipient's service area, consistent with 1.3 of Subchapter A of this chapter, concerning Delinquent Audits and Related Issues, the Department will not enter into a contract or extend a contract with any Subrecipient who is delinquent in the submission of their Single Audit, unless an extension has been approved in writing by the cognizant federal agency. (l) The Department will not enter into a contract with any Subrecipient who has a board member on the Department's debarment list or the federal debarred and suspended listing. However, other than debarment, individual board member's participation in other Department programs is not required to be disclosed and will not be taken into consideration. (m) The Department will not enter into a contract with any Subrecipient who is on the Department's or the federal debarred and suspended listing. (n) Previous Participation reviews will not be conducted for contract extensions. However, if the entity is delinquent in submission of its Single Audit, the contract will not be extended. (o) Full Previous Participation reviews will not be conducted for contract amendments if the increase in funds is 15% or less. However, EARAC will be notified of any monitoring findings that have been identified since the most recent previous participation review and for which the corrective action period has elapsed. In addition, EARAC will be notified of any Single Audit findings that have been identified since the most recent previous participation review. The contract will not be amended if the entity is delinquent in submission of its Single Audit. Subsections (f) and (i) of this section shall not apply for an amendment that award funds under this subsection. Full Previous Participation reviews will be conducted for contract amendments if the increase in funds is greater than 15%. (p) Previous Participation reviews for discretionary or competitive awards made under any of these programs will be conducted prior to the award of funds. Subrecipients will be required to submit the required information listed in subsection (b) of this section along with the application for funding Previous Participation Reviews for Department Program Awards Not Covered by or of This Subchapter. (a) This section applies to program awards not covered by or of this subchapter. With the exception of a household or project commitment contract, prior to awarding or allowing access to Department funds through a contract or through a Reservation Agreement a previous participation review will be performed. (b) Capitalized terms used in this section shall have the meaning ascribed in the definitions section of the applicable program of this title or as required by federal or state law. (c) When applying for an award or a new Reservation Agreement, entities will be required to submit: (1) A listing of the members of its current board of directors, council, or other governing body as applicable; (2) Any pending state or federal litigation (including administrative proceedings) against the entity along with any final decrees within the last three years; (3) A list of any multifamily Developments owned or Controlled by the applicant that are monitored by the Department; and (4) Identification of all Department programs that the entity has participated in within the last three years. (d) The entity's financial obligations to the Department will be reviewed to determine if any of the following deficiencies exist: (1) Payment of principal or interest on a loan due to the Department is past due beyond any grace period provided for in the applicable loan documents; (2) The Department has requested and not been provided evidence that the owner has maintained required insurance on any collateral for any loan held by the Department; (3) The Department has requested and not been provided evidence that property taxes have been paid or satisfactory evidence of a tax exemption on any collateral for any loan held by the Department; or (4) Fees or other amounts owed to the Department are thirty days or more past due. (e) If any deficiencies in subsection (c) of this section are identified, or if the most recent Single Audit contained findings or if there have been any monitoring findings identified during the last three years, the applicant will be notified that EARAC will be informed of such issues (with the exception of events of noncompliance precluded by Texas Government Code (e)). The entity will be provided a 5 business day period to provide written comment or propose conditions or mitigations. Although there will be an opportunity to respond and comment within the five day period, a response is not required. (f) EARAC will review the information and may recommend approval, denial or approval with conditions. EARAC may request any other information from the Compliance Division that is documented in PROPOSED RULES May 1, TexReg 2361

18 the compliance history with the exception of events of noncompliance precluded by Texas Government Code (e). (g) Any entity which will be recommended for denial or award with conditions will be informed in writing and will be required submit a written response or propose conditions or mitigations. If the entity's response does not result in EARAC recommending award with no conditions or award with conditions that the entity agrees to, the entity will have the opportunity to appeal EARAC's recommendation in accordance with of this subchapter. (h) Consistent with 1.3 of Subchapter A of this chapter, concerning Delinquent Audits and Related Issues, the Department will not enter into a contract or extend a contract with any entity who is delinquent in the submission of their Single Audit unless an extension has been approved in writing by the cognizant federal agency. (i) The Department will not enter into a contract with any entity who has a Board member on the Department's debarment list or the federal debarred and suspended listing. However, individual Board member's participation in other Department programs is not required to be disclosed and will not be taken into consideration. (j) The Department will not enter into a contract with any entity who is on the Department's or the federal debarred and suspended listing. (k) Previous Participation reviews will not be conducted for contract extensions. However, if the entity is delinquent in submission of its Single Audit, the contract will not be extended. (l) For the Emergency Solutions Grant, full Previous Participation reviews will not be conducted for contract amendments unless the amendment is an increase in funds of more than 15%. However, EARAC will be notified of any monitoring findings that have been identified since the most recent previous participation review and for which the corrective action period has elapsed. In addition, EARAC will be notified of any Single Audit findings that have been identified since the most recent previous participation review. Subsections (d) and (f) of this section shall not apply to amendments that award additional funds under this subsection. Full Previous Participation reviews will be conducted for contract amendments if the increase in funds is greater than 15%. (m) Approval of an entity's Previous Participation made for awards or Reservation System Agreements under this section is effective for 12 months unless there has been a significant change in the entity's compliance status or there are significant differences in the compliance requirements of the programs Appeal of an EARAC Recommendation under the Previous Participation Review Rule. (a) An applicant or possible subrecipient of an award may appeal an EARAC recommendation by submitting to the Department (to the attention of the Chair of EARAC), as provided herein, a letter (the "Appeal") setting forth: (1) That the applicant or subrecipient disagrees with the EARAC recommendation; (2) The reason(s) why the applicant disagrees with EARAC's recommendation; and (3) If desired, a request for an in person meeting with EARAC. (b) An appealing party must file a written Appeal not later than the seventh day after notice has been provided and include a hard copy and pdf version of all materials, if any, that the applicant wishes to have provided to the board in connection with its consideration of the matter. (c) An Appeal will be included on the Governing Board agenda if received at least three business days prior to the required posting of that agenda. The agenda item will include the materials provided by the applicant and may include a staff response to the appeal and/or materials. It is within the board chair's discretion whether or not to allow an applicant to supplement its response. An applicant who wishes to provide supplemental materials must comply with the requirements of 1.10 of this chapter regarding Public Comment Procedures. There is no assurance the board chair will permit the submission, inclusion, or consideration of such supplemental materials. (d) The board and staff will make reasonable efforts to accommodate properly and timely filed Appeals, but there may be unanticipated circumstances in which the continuity of assistance or other exigent circumstances dictate proceeding with an award notwithstanding the fact that an EARAC recommendation has been appealed. These situations, should they arise, will be addressed on an ad hoc basis. Filed with the Office of the Secretary of State on April 17, TRD Timothy K. Irvine Executive Director Texas Department of Housing and Community Affairs For further information, please call: (512) CHAPTER 10. UNIFORM MULTIFAMILY RULES SUBCHAPTER F. COMPLIANCE MONITORING 10 TAC , , The Texas Department of Housing and Community Affairs (the "Department") proposes amendments to 10 TAC Chapter 10, Subchapter F, , concerning Reporting Requirements; , concerning Special Rules Regarding Rents and Rent Limit Violations; and , concerning Monitoring Procedures for Housing Tax Credit Properties After the Compliance Period. The purpose for each amendment is described below. 10 TAC (d), concerning Reporting Requirements During the most recent rulemaking process, this subsection was amended. In that rulemaking, in subsection (d)(2), the Department made a change to the proposed amendment based on public comment; however, the rule that was adopted did not accurately incorporate the public comment. Further, when the amendment was originally published for public comment in the September 19, 2014, issue of the Texas Register (39 TexReg 7458), the Texas Register did not publish the amendments as submitted and as approved by the Board at the September 4, 2014 meeting. It appears that instead of publishing the correct language for subsection (d)(1) as submitted, a duplication of (d)(2) was published for public comment. The purpose of this amendment is to correct the paragraph to align with the public comment as intended and provide that certain reports are due on the 15th business day of the month and to correct the error in the language adopted for (d)(1). 40 TexReg 2362 May 1, 2015 Texas Register

19 10 TAC (d) (concerning Special Rules Regarding Rents and Rent Limit Violations) and (concerning Monitoring Procedures for Housing Tax Credit Properties After the Compliance Period) The Department published proposed amendments to and to solicit public comment. During the public comment period, the Internal Revenue Service ("IRS") released a Chief Counsel Advice ("CCA") memorandum that addressed the treatment of low income units occupied with resident managers, maintenance personnel and/or security officers. In general, these units are not considered residential rental units, rather facilities reasonably required for the project. Prior to the release of this CCA, guidance from the IRS provided that a if resident manager, maintenance personnel and/or security officer occupied a low income unit and the household was charged rent, then the unit was not considered a facility reasonably required for the project and the household in the unit must be eligible. This newly released CCA reverses the previous IRS guidance. This change affects and and, as a result, the amendments proposed during the February 19, 2015 meeting have been withdrawn and the proposed amendments now incorporate the CCA. The change to (d) is intended to provide owners of non-housing Tax Credit developments the same specificity regarding how to correct noncompliance related to overcharging rent that is available in subsection (b) for owners of Housing Tax Credits developments. Section currently provides that, once a Development completes the 15-year Federal Compliance Period, low-income occupancy requirements can be met Development wide instead of building by building as required during the Compliance Period. The intent was to allow for flexibility; however, the impact of employee occupied units was not taken into consideration. Under certain scenarios, a Development that was meeting the low-income occupancy requirements during the Compliance Period could be found in noncompliance with the application of the rule as currently written. The CCA referenced above specifically addresses the treatment of employee occupied units and the proposed change to (h) will resolve this concern. FISCAL NOTE. Timothy K. Irvine, Executive Director, has determined that, for each year of the first five years the amendments are in effect, enforcing or administering the amendments do not have any foreseeable implications related to costs or revenues of the state or local governments. PUBLIC BENEFIT/COST NOTE. Mr. Irvine also has determined that, for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of the amendments will be improved compliance and consistency with federal and state requirements with the requirements and other provisions of the rule. There will not be any additional new economic cost to individuals required to comply with the proposed amendments. ADVERSE IMPACT ON SMALL OR MICRO-BUSINESSES. The Department has determined that there will not be any additional economic effect on small or micro-businesses based on these proposed amendments. REQUEST FOR PUBLIC COMMENT. The public comment period will be held May 1, 2015, through June 1, 2015, to receive input on the proposed amendments. Written comments may be submitted to the Texas Department of Housing and Community Affairs, Stephanie Naquin, Rule Comments, P.O. Box 13941, Austin, Texas or by fax to (512) ALL COMMENTS MUST BE RECEIVED BY 5:00 P.M. JUNE 1, STATUTORY AUTHORITY. The amendments are proposed pursuant to Texas Government Code, , which authorizes the Department to adopt rules. The proposed amendments affect no other code, article, or statute Reporting Requirements. (a) - (c) (No change.) (d) The owner is required to report certain financial information to the Department electronically through CMTS. If supplemental information is required it must be uploaded to the Development's CMTS account. (1) "Annual Owner's Financial Certification" (formerly Part D of the AOCR). Developments funded by the Department must annually provide and certify to the data requested in the Annual Owner's Financial Certification (AOFC). [Developments funded with Exchange or TCAP must also submit a "Quarterly Owner's Financial Certification" and these must be submitted in January, April, July, and October on the 10th day of the month.] (2) Developments funded with Exchange or TCAP must also submit a "Quarterly Owner's Financial Certification" and these must be submitted in January, April, July, and October on the 15th business day of the month. (e) - (i) (No change.) Special Rules Regarding Rents and Rent Limit Violations. (a) Rent or Utility Allowance Violations of the maximum allowable limit for the HTC program. Under the HTC program, the amount of rent paid by the household plus an allowance for utilities, plus any mandatory fees, cannot exceed the maximum applicable limit (as determined by the minimum set-aside elected by the Owner) published by the Department. If it is determined that a HTC Development, during the Compliance Period, collected rent in excess of the rent limit established by the minimum set-aside, the owner must correct the violation by reducing the rent charged. The Department will report the violation as corrected on January 1st of the year following the violation. The refunding of overcharged rent does not avoid the disallowance of the credit by the IRS. (b) Rent or Utility Allowance Violations of additional rent restrictions under the HTC program. If Owners agreed to additional rent and occupancy restrictions, the Department will monitor to confirm compliance. If noncompliance is discovered, the Department will require the Owner to restore compliance by refunding (not a credit to amounts owed the Development) any excess rents to a sufficient number of households to meet the set aside. Example 622(1): A 100 unit development is required to lease 10 units to households at the 30 percent income and rent limits. The utility allowance is miscalculated resulting in overcharged rents. Fifteen households have an income under 30 percent. The owner must refund 10 of these households. (c) Rent Violations of the maximum allowable limit due to application fees under the HTC program. Under the HTC program, Owners may not charge tenants any overhead costs as part of the application fee. Owners must only charge the actual cost for application fees as supported by invoices from the screening company the Owner uses. (1) The amount of time Development staff spends checking an applicant's income, credit history, and landlord references may be included in the Development's application fee. Development Owners may add up to $5.50 per Unit for their other out of pocket costs for processing an application without providing documentation. Example 622(2): A Development's out of pocket cost for processing an application is $17.00 per adult. The property may charge $22.50 for the first PROPOSED RULES May 1, TexReg 2363

20 adult and $17.00 for each additional adult. Should an Owner desire to include a higher amount to cover staff time, prior approval is required and wage information and a time study must be supplied to the Department. (2) Documentation of Development costs for application processing or screening fees must be made available during onsite visits or upon request. The Department will review application fee documentation during onsite monitoring visits. If the Development pays a flat monthly fee to a third party for credit or criminal background checks, Owners must calculate the appropriate fee to be charged applicants by using the total number of applications processed, not just approved applications. If the Department determines from a review of the documentation that the Owner has overcharged residents an application fee, the noncompliance will be reported to the IRS on Forms 8823 under the category "gross rent(s) exceeds tax credit limits." The noncompliance will be corrected on January 1st of the next year. (3) Owners are not required to refund the overcharged fee amount. To correct the issue, owners must reduce the application fee for prospective applicants. Once the fee is reduced for prospective applicants, the Department will report the affected units back in compliance on January 1st of the year after they were overcharged the application fee. (d) Rent or Utility Allowance Violations on Non-HTC Developments, HTC development after the Compliance Period, and foreclosed HTC properties for three years after foreclosure. If it is determined that the Development collected rent in excess of the allowable limit, the Department will require the Owner to refund (not a credit to amounts owed the Development) to the affected residents the amount of rent that was overcharged. (e) Trust Account to be established. If the Owner is required to refund rent under subsection (b) or (d) of this section and cannot locate the resident, the excess monies must be deposited into a trust account for the tenant. The account must remain open for the shorter of a four (4) year period, or until all funds are claimed. If funds are not claimed after the four year period, the unclaimed funds must be remitted to the Texas Comptroller of Public Accounts Unclaimed Property Holder Reporting Section to be disbursed as required by Texas unclaimed property statutes. (f) Rent Adjustments for HOME Developments: (1) 100 percent HOME assisted Developments. If a household's income exceeds 80 percent at recertification, the owner must charge rent equal to 30 percent of the household's adjusted income; (2) HOME Developments with any Market Rate units. If a household's income exceeds 80 percent at recertification, the owner must charge rent equal to the lesser of 30 percent of the household's adjusted income or the comparable Market rent; and (3) HOME Developments layered with other Department affordable housing programs. If a household's income exceeds 80 percent at recertification, the owner must charge rent equal to the lesser of 30 percent of the household's adjusted income or the rent allowable under the other program. (g) Special conditions for NSP Developments. To determine if a Unit is rent restricted, the amount of rent paid by the household, plus an allowance for utilities, plus any rental assistance payment must be less than the applicable limit. (h) Employee Occupied Units (HTC and HTF Developments). IRS Revenue Rulings 92-61, and Chief Counsel Advice Memorandum POSTN provide guidance on employee occupied units. In general, employee occupied units are considered facilities reasonably required for the project(s) and not residential rental units. Since the building's applicable fraction is calculated using the residential rental units/space in a building, employee occupied units are taken out of both the numerator and the denominator. To ensure that the building's applicable fraction is met, the Department will monitor in the following manner: [Provided that all the criteria in the Rulings are met, if the Owner of the Development does not charge the employee for rent, the unit will be removed from the numerator and denominator of the applicable fraction to determine compliance. If the owner charges the employee any amount of rent, the Department will evaluate the eligibility of the household. If the household's income exceeds the maximum allowable limit or there is any other noncompliance, the event will be cited and reported to the IRS on IRS Form 8823 as appropriate. Owners must ensure that additional rent and occupancy restrictions are maintained even if units are leased to employees.] (1) For 100% low-income Building(s)--A unit occupied by an employee will not be monitored by the Department provided that the unit is appropriately designated as exempt. (2) For mixed income Building(s)--If a unit in a mixed income building is designated as exempt, the applicable fraction will be calculated as described in this subsection. If the building does not meet the required applicable fraction, the exempt unit will be cited in noncompliance unless the employee qualifies as a low income household Monitoring Procedures for Housing Tax Credit Properties After the Compliance Period. (a) HTC properties allocated credit in 1990 and after are required under 42(h)(6) of the Code to record a LURA restricting the Development for at least thirty (30) years. Various sections of the Code specify monitoring rules State Housing Finance Agencies must implement during the Compliance Period. (b) After the Compliance Period, the Department will continue to monitor HTC Developments using the criteria detailed in paragraphs (1) - (13) of this subsection: (1) The frequency and depth of monitoring household income, rents, social services and other requirements of the LURA will be determined based on risk. Factors will include changes in ownership or management, compliance history, timeliness of reports and timeliness of responses to Department request; (2) At least once every three (3) years the property will be physically inspected including the exterior of the Development, all building systems and 10 percent of Low-Income Units. No less than five but no more than thirty-five of the Development's HTC Low-Income Units will be physically inspected to determine compliance with HUD's Uniform Physical Condition Standards; (3) Each Development shall submit an annual report in the format prescribed by the Department; (4) Reports to the Department must be submitted electronically as required in of this chapter (relating to Reporting Requirements); (5) Compliance monitoring fees will continue to be submitted to the Department annually in the amount stated in the LURA; (6) All HTC households must be income qualified upon initial occupancy of any Low-Income Unit. Proper verifications of income are required, and the Department's Income Certification form must be completed unless the Development participates in the Rural Rental Housing Program or a project based HUD program, in which case the other program's certification form will be accepted; (7) Rents will remain restricted for all HTC Low-Income Units. After the Compliance Period, utilities paid to the Owner are 40 TexReg 2364 May 1, 2015 Texas Register

21 [can be] accounted for in the utility allowance. The tenant paid portion of the rent plus the applicable utility allowance must not exceed the applicable limit. Any excess rent collected must be refunded; (8) All additional income and rent restrictions defined in the LURA remain in effect; (9) For Additional Use Restrictions, defined in the LURA (such as supportive services, nonprofit participation, elderly, etc), refer to the Development's LURA to determine if compliance is required after the completion of the Compliance Period or if the Compliance Period was specifically extended beyond 15 years. Example 623(1): The Development's LURA states "The Compliance Period shall be a period of 20 consecutive taxable years and the Extended Use Period shall be a period of 35 consecutive taxable years, each commencing with the first year of the Credit Period." In this scenario, the Additional Use Restrictions prescribed in the LURA are applicable through year 20, but since the Federal Compliance Period has ended, the Development will be monitored under this section; (10) The Owner shall not terminate the lease or evict lowincome residents for other than good cause; (11) The total number of required HTC Low-Income Units can [must] be maintained Development wide; (12) Owners may not charge fees for amenities that were included in the Development's Eligible Basis; [and] (13) Once a calendar year, Owners must continue to collect and maintain current data on each household that includes the number of household members, age, ethnicity, race, disability status, rental amounts and rental assistance (if any). This information can be collected on the Department's Annual Eligibility Certification form or the Income Certification form or HUD Income Certification form or USDA Income Certification form; and [Owners must continue to collect and report data in accordance (b)(1) of this chapter (relating to Tenant File Requirements).] (14) Employee occupied units will be treated in the manner prescribed in (h) of this chapter (relating to Special Rules Regarding Rents and Rent Limit Violations). (c) After the first fifteen (15) years of the Extended Use Period, certain requirements will not be monitored as detailed in paragraphs (1) - (6) of this subsection. (1) The student restrictions found in 42(i)(3)(D) of the Code. An income qualified household consisting entirely of full time students may occupy a Low-Income Unit. If a Development markets to students or leases more than 15 percent of the total number of units to student households, the property will be found in noncompliance unless the LURA is amended through the Material Amendments procedures found in of this chapter (relating to Amendments). [(2) The building's applicable fraction found in the Development's Cost Certification and/or the LURA. Low-Income occupancy requirements will be monitored Development wide, not building by building;] (2) [(3)] All households, regardless of income level or 8609 elections, will be allowed to transfer between buildings within the Development; (3) [(4)] The Department will not monitor the Development's application fee after the Compliance Period is over; and (4) [(5)] Mixed income Developments are not required to conduct annual income recertifications. However, Owners must continue to collect and report data in accordance with paragraph (b)(13) of this section; and [ of this chapter (relating to Lease Requirements).] (5) [(6)] The Department will not monitor whether rent is being charged for an employee occupied unit. (d) While the requirements of the LURA may provide additional requirements, right and remedies to the Department or the tenants, the Department will monitor post year fifteen (15) in accordance with this section as amended. (e) Unless specifically noted in this section, all requirements of this chapter, the LURA and 42 of the Code remain in effect for the Extended Use Period. These Post-Year Fifteen (15) Monitoring Rules apply only to the HTC Developments administered by the Department. Participation in other programs administered by the Department may require additional monitoring to ensure compliance with the requirements of those programs. Filed with the Office of the Secretary of State on April 17, TRD Timothy K. Irvine Executive Director Texas Department of Housing and Community Affairs For further information, please call: (512) CHAPTER 80. MANUFACTURED HOUSING The Manufactured Housing Division of the Texas Department of Housing and Community Affairs (the "Department") proposes to amend 10 TAC Chapter 80, 80.3, 80.30, 80.32, 80.36, 80.41, 80.73, and 80.90, relating to the regulation of the manufactured housing program. The rules are revised for clarification purposes. Section 80.3(f): Revised to clarify the installer is also eligible to request an industry inspection per (b) of the Standards Act. Section 80.30(f): Revised to clarify the rule also relates to any advertisements in social media. Section 80.30(g): Revised to clarify the rule also relates to any advertisements in social media. Section 80.32(u): The new section clarifies how long a person has to exercise their right of rescission without penalty or charge. Section 80.36(a): Reworded to reference the definition of a salvaged home as defined in of the Standards Act. Section 80.36(d): Reworded to reference the definition of a salvaged home as defined in of the Standards Act. Section 80.41(d)(6)(B): The new subparagraph enables the continuing education provider to submit their renewal application and fee and continue operating. This will be most beneficial in the event that a renewal is pending and the regularly scheduled board meetings are postponed and or rescheduled, or canceled due to lack of a quorum. Section 80.41(f)(1): The revision will assists in preventing former license holders whose license was revoked, suspended, and/or PROPOSED RULES May 1, TexReg 2365

22 denied from applying for a salesperson's license when they may be viewed as unsuitable to work in the manufactured housing industry. Section 80.73(e): Clarifies the timeframe in which the Department requires the licensee to submit the completed service or work orders. Section 80.73(f): Revised to remind license holders of the risk of requesting an extension without sufficient basis well in advance in case the request is denied. Section 80.90(a)(6): Revised to include personal property in the designation for use as a dwelling that requires evidence of a satisfactory habitability inspection by the Department. Joe A. Garcia, Executive Director of the Manufactured Housing Division of the Texas Department of Housing and Community Affairs, has determined that for the first five-year period that the proposed rules are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering these sections. There will be no effect on small or micro-businesses because of the proposed amendments. There are no anticipated economic costs to persons who are required to comply with the proposed rules. Mr. Garcia also has determined that for each year of the first five years that the proposed rules are in effect the public benefit as a result of enforcing the amendments will be to provide clarification of procedures and to comply with the Manufactured Housing Standards Act. Mr. Garcia has also determined that for each year of the first five years the proposed rules are in effect there should be no adverse effect on a local economy, and therefore no local employment impact statement is required under Administrative Procedure Act (APA), Texas Government Code If requested, the Department will conduct a public hearing on this rulemaking, pursuant to the Administrative Procedure Act, Texas Government Code The request for a public hearing must be received by the Department within 15 days after publication. Comments may be submitted to Mr. Joe A. Garcia, Executive Director of the Manufactured Housing Division of the Texas Department of Housing and Community Affairs, P.O. Box 12489, Austin, Texas or by at [email protected]. The deadline for comments is no later than 30 days from the date that these proposed rules are published in the Texas Register. SUBCHAPTER A. CODES, STANDARDS, TERMS, FEES AND ADMINISTRATION 10 TAC 80.3 The amendment is proposed under of the Texas Occupations Code, which provides the Director with authority to amend, add, and repeal rules governing the Manufactured Housing Division of the Department and of the Texas Occupations Code, which authorizes the board to adopt rules as necessary and the director to administer and enforce the manufactured housing program through the Manufactured Housing Division. No other statutes, codes, or articles are affected by the proposed rule Fees. (a) - (e) (No change.) (f) Industry Request. The manufacturer, [or] retailer, or installer may request a consumer complaint home inspection. The request must be accompanied by the required fee of $ (g) - (n) (No change.) Filed with the Office of the Secretary of State on April 17, TRD Joe A. Garcia Executive Director, Manufactured Housing Division Texas Department of Housing and Community Affairs For further information, please call: (512) SUBCHAPTER C. LICENSEES' RESPONSIBIL- ITIES AND REQUIREMENTS 10 TAC 80.30, 80.32, The amended sections are proposed under of the Texas Occupations Code, which provides the Director with authority to amend, add, and repeal rules governing the Manufactured Housing Division of the Department and of the Texas Occupations Code, which authorizes the board to adopt rules as necessary and the director to administer and enforce the manufactured housing program through the Manufactured Housing Division. No other statutes, codes, or articles are affected by the proposed rules All Licensees' Responsibilities. (a) - (e) (No change.) (f) Any advertisement (including social media) by a retailer, broker, or installer (other than a sign/display advertisement at a licensed location, point of sale literature, or a price tag) must conspicuously disclose the license number of the person who is advertising. (g) Any advertisement (including social media) by a salesperson must conspicuously disclose the name and license number of their sponsoring retailer identified on their valid salespersons license. (h) - (i) (No change.) Retailers' Responsibilities and Requirements. (a) - (t) (No change.) (u) A person may exercise their right of rescission of contract for sale, exchange, or lease-purchase of home pursuant to of the Standards Act within three (3) business days without penalty or charge. (v) [(u)] The written warranty that the used manufactured home is habitable as per of the Standards Act, shall have been timely delivered if given to the homeowner at or prior to possession or at the time the applicable sales agreement is signed. (w) [(v)] The written manufacturer's new home construction warranty per of the Standards Act, shall be timely delivered if given to the homeowner at or prior to the time of initial installation at the consumer's home site. 40 TexReg 2366 May 1, 2015 Texas Register

23 Retailer's Rebuilding Responsibilities and Requirements. (a) Any home that is salvaged [which has sustained sufficient damage to be declared salvage] as defined in of the Standards Act, may be rebuilt/repaired for purposes of issuance of a manufactured Statement of Ownership and Location at the option of the Department after inspection in accordance with Department procedures. Notification in writing to the Department at its Austin headquarters [headquarter's office] shall be required before rebuilding/repair begins. (b) - (c) (No change.) (d) A manufactured home which does not meet the definition of salvage as defined in of the Standards Act, [has not sustained sufficient damage to be declared salvage] may be refurbished to its original structural configuration so that it is habitable as defined by of the Standards Act. Filed with the Office of the Secretary of State on April 17, TRD Joe A. Garcia Executive Director, Manufactured Housing Division Texas Department of Housing and Community Affairs For further information, please call: (512) SUBCHAPTER D. LICENSING 10 TAC The amended section is proposed under of the Texas Occupations Code, which provides the Director with authority to amend, add, and repeal rules governing the Manufactured Housing Division of the Department and of the Texas Occupations Code, which authorizes the board to adopt rules as necessary and the director to administer and enforce the manufactured housing program through the Manufactured Housing Division. No other statutes, codes, or articles are affected by the proposed rule License Requirements. (a) - (c) (No change.) (d) Continuing Education. (1) - (5) (No change.) (6) Once the Department determines that a request for approval is complete, that request will be placed on the next regularly scheduled meeting of the Board for consideration. The Department will provide the board with a written recommendation on each such request. The staff will advise the applicant of the board's action within ten (10) business days of the date of the board meeting, including a written statement as to any limitations, conditions, or other requirements imposed. (A) Approvals shall be for a period not to exceed two years. The Department may, at no cost, attend or send a representative to attend any approved portion of the continuing education program to determine that the courses are being taught in accordance with the terms of approval. (B) Should the two-year approval time for a continuing education provider expire in between regularly scheduled board meetings, the executive director may issue approval to continue providing services until the next board meeting upon receipt of the required renewal application, fee, and necessary documentation of education material. (C) [(B)] The Department may revoke or suspend approval of a continuing education program if the Department determines that any of the courses are not being taught in accordance with the terms of approval or that any of the courses are not being administered in accordance with the law or these rules. Any action to revoke or suspend such an approval is a contested matter under Chapter 2001, Government Code, and the party against whom revocation or suspension is sought may make a written request for a hearing before an Administrative Law Judge. If no such hearing is requested within thirty (30) calendar days after receipt of notice from the Department, the Department order of suspension or revocation shall become final. (e) (No change.) (f) License Application or Renewal Denial. (1) In the evaluation of an applicant for a license, [other than a salesperson's license,] the Director shall consider whether the applicant or any related person involved with the applicant has previously: (A) - (E) (No change.) (2) - (6) (No change.) (g) (No change.) Filed with the Office of the Secretary of State on April 17, TRD Joe A. Garcia Executive Director, Manufactured Housing Division Texas Department of Housing and Community Affairs For further information, please call: (512) SUBCHAPTER E. ENFORCEMENT 10 TAC The amended section is proposed under of the Texas Occupations Code, which provides the Director with authority to amend, add, and repeal rules governing the Manufactured Housing Division of the Department and of the Texas Occupations Code, which authorizes the board to adopt rules as necessary and the director to administer and enforce the manufactured housing program through the Manufactured Housing Division. No other statutes, codes, or articles are affected by the proposed rule Procedures for Handling Consumer Complaints. (a) - (d) (No change.) (e) When service or repairs are completed following any notice or orders from the Department pursuant to (a) of the Standards Act, the manufacturer, retailer, and/or installer shall forward PROPOSED RULES May 1, TexReg 2367

24 to the Department copies of service or work orders reflecting the date the work was completed, or other documentation to establish that the warranty service or repairs have been completed. A consumer is not required to sign the service or work order. These service or work orders must be received by the Department no later than [within] five (5) calendar days from [after] the expiration of the period of time specified in the warranty order issued by the Department. Corrective action taken is subject to re-inspection. (f) If service or repairs cannot be made within the specified time frame, the license holder shall notify the Department in writing prior to the expiration of the specified time on the warranty order [frame by certified mail]. The notice shall list those items which have been, or will be, completed within the time frame and shall show good cause why the remainder of the service or repairs cannot be made within the specified time frame. The license holder shall request an extension for a specific time. Original deadline to complete warranty work may apply if the request for extension is denied. If the Department fails to respond in writing to the request within five (5) business days of the date of receipt of the notice of request for extension, the extension has been granted. (g) - (h) (No change.) Filed with the Office of the Secretary of State on April 17, TRD Joe A. Garcia Executive Director, Manufactured Housing Division Texas Department of Housing and Community Affairs For further information, please call: (512) SUBCHAPTER G. STATEMENTS OF OWNERSHIP AND LOCATION 10 TAC The amended section is proposed under of the Texas Occupations Code, which provides the Director with authority to amend, add, and repeal rules governing the Manufactured Housing Division of the Department and of the Texas Occupations Code, which authorizes the board to adopt rules as necessary and the director to administer and enforce the manufactured housing program through the Manufactured Housing Division. No other statutes, codes, or articles are affected by the proposed rule Issuance of Statements of Ownership and Location. (a) Application Requirements. In order to be deemed complete, an application for a Statement of Ownership and Location must include, as applicable: (1) - (5) (No change.) (6) When a manufactured home is to be designated for use as a dwelling and/or personal property after the home has been designated for business use, salvage, or as real property, evidence of a satisfactory habitability inspection by the Department. (b) - (i) (No change.) Filed with the Office of the Secretary of State on April 17, TRD Joe A. Garcia Executive Director, Manufactured Housing Division Texas Department of Housing and Community Affairs For further information, please call: (512) TITLE 13. CULTURAL RESOURCES PART 1. TEXAS STATE LIBRARY AND ARCHIVES COMMISSION CHAPTER 7. LOCAL RECORDS SUBCHAPTER D. RECORDS RETENTION SCHEDULES 13 TAC (Editor's note: In accordance with Texas Government Code, , which permits the omission of material which is "cumbersome, expensive, or otherwise inexpedient," the figure in 13 TAC 7.125(a)(1) is not included in the print version of the Texas Register. The figure is available in the on-line version of the May 1, 2015, issue of the Texas Register.) The Texas State Library and Archives Commission proposes to amend 13 TAC 7.125, concerning Records Retention Schedules. The amendment affects subsection (a)(1) regarding local government retention schedule for Records Common to All Local Governments (Schedule GR) pursuant to the Government Code (a). The amendment proposes revisions necessary to keep the schedule up-to-date with current laws, administrative rules, and improve retention of public records. Craig Kelso, Director, State and Local Records Management Division, has determined that for each year of the first five years the amendment is in effect, will be no fiscal implications for state or local governments as a result of administering or enforcing the amendment. Mr. Kelso does not anticipate either a loss of, or an increase in, revenue to state or local governments as a result of the proposed amendment. Mr. Kelso has also determined that for each year of the first five years the amendment is in effect the public benefit will be that the amended schedules will help to provide better management of records by improving retention of public records and will increase access to those records by the public. There will be no impact on small businesses, micro-businesses, or individuals as a result of enforcing the amendment as proposed. Written comments on the proposed amendment may be submitted to Sarah Jacobson, Manager, Records Management Assistance, Box 12927, Austin, Texas 78711; by fax to (512) ; or by to [email protected]. The amendment is proposed under Government Code that grants authority to the Texas State Library and Archives 40 TexReg 2368 May 1, 2015 Texas Register

25 Commission to provide records retention schedules to local governments and that allows the commission to revise the schedules. The proposed amendment affects Government Code and Records Retention Schedules. (a) The following records retention schedules, required to be adopted by rule under Government Code (a) are adopted. (1) Local Schedule GR: Records Common to All Local Governments, 5th [Revised 4th] Edition. Figure: 13 TAC 7.125(a)(1) [Figure: 13 TAC 7.125(a)(1)] (2) - (12) (No change.) (b) (No change.) Filed with the Office of the Secretary of State on April 17, TRD Edward Seidenberg Deputy Director Texas State Library and Archives Commission For further information, please call: (512) TITLE 22. EXAMINING BOARDS PART 17. TEXAS STATE BOARD OF PLUMBING EXAMINERS CHAPTER 367. ENFORCEMENT 22 TAC The Texas State Board of Plumbing Examiners proposes new 22 TAC establishing the procedures to follow for certain outcomes of cases prosecuted at the State Office of Administrative Hearings (SOAH). The proposal also addresses who bears the burden of proof in license denial cases and the consequences if an applicant fails to appear at a license denial hearing. Subsection (a) of this rule addresses cases in which a party, who does not bear the burden of proof, fails to appear at a contested hearing. It resolves the issue of whether staff at the Texas State Board of Plumbing Examiners (Board) must draft a default order or whether the Administrative Law Judge (ALJ) presiding at the contested hearing must issue a default proposal for decision. This section requires that the ALJ prepare a default proposal for decision. Subsection (b) addresses cases in which an ALJ fails to issue a default proposal for decision. The proposal greatly streamlines the preparation of the final order because staff can now state that the final order deems that the allegations in the complaint are true rather than prepare a lengthy final order that lists each allegation against the respondent that is contained in the complaint. Subsection (c) clarifies the appeal process for a respondent who contests a final order issued after a default order is adopted by the Board. Subsection (d) clarifies the consequences to a respondent who fails to appear at a license denial hearing at SOAH. Subsection (e) clarifies that the applicant in a license denial case bears the burden of proof at a license denial hearing. Fiscal Note Lisa Hill, Executive Director, has determined that for the first five-year period the new rule is in effect, there will be no additional cost to state or local governments as a result of enforcing or administering the rule. Ms. Hill has determined that there will be no economic cost to individuals who would otherwise be subject to this rule. Ms. Hill has also determined there will be no measurable effect on small businesses and micro businesses. There is no anticipated difference in effect between small and large businesses. Public Benefit Ms. Hill has concluded that for each year of the first five years the rule is enacted, the anticipated public benefit will be to provide clearer and more precise procedures for cases resulting in default and greater clarity for license denial cases. Public Comment The Texas State Board of Plumbing Examiners invites comments on the proposed new rule from any member of the public. Written comments should be mailed to Lisa Hill, Executive Director, at P.O. Box 4200, Austin, Texas ; faxed to her attention at (512) ; or sent by to [email protected]. Statutory Authority New is proposed under and affect Chapter 1301 of the Texas Occupations Code (Plumbing License Law). Occupations Code requires the Board to adopt and enforce rules necessary to administer the Plumbing License Law. No other statute, article, or code is affected by the proposed new rule Failure to Attend Hearing and Default. (a) Default. If the party who does not have the burden of proof fails to appear at a contested case hearing at the State Office of Administrative Hearings, the administrative law judge must issue a default proposal for decision that can be adopted by the Board. (b) Failure to issue default proposal for decision. If the administrative law judge grants a default but does not issue a default proposal for decision and instead issues a default order dismissing the case and returning the file to the Plumbing Board for informal disposition on a default basis in accordance with of the Texas Government Code, the Board may issue a final order deeming the allegations in the complaint as true. (c) Contesting a final order issued following a default. In the event that the respondent wishes to contest a final order issued following a default, the respondent must file a motion for rehearing to set aside the final order within 20 days after issuance of that order, and this motion must show the following: (1) the failure to timely file a written answer or appear at the SOAH hearing was caused by fraud, accident, or wrongful act or mistake of the Board; PROPOSED RULES May 1, TexReg 2369

26 (2) the failure to timely file a written answer or appear at the SOAH hearing was not the result of respondent's fault or negligence nor of respondent's representative if any; (3) the respondent has a meritorious defense; and (4) the motion for rehearing must be supported by affidavits and documentary evidence of the above and show a prima facie case for a meritorious defense. (d) Failure to Prosecute. If a party who has the burden of proof fails to appear at a contested case hearing at the State Office of Administrative Hearings, the administrative law judge must dismiss the case for want of prosecution, any relevant application will be withdrawn, and the board may not consider a subsequent petition from the party until the first anniversary of the date of dismissal of the case. (e) Applicants for licensure bear the burden to prove fitness for licensure. Filed with the Office of the Secretary of State on April 13, TRD Lisa Hill Executive Director Texas State Board of Plumbing Examiners For further information, please call: (512) TITLE 25. HEALTH SERVICES PART 1. DEPARTMENT OF STATE HEALTH SERVICES CHAPTER 1. MISCELLANEOUS PROVISIONS The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of 1.91 and 1.181, concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeals will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the sections as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeals as proposed because small businesses and micro-businesses will not be required to alter their business practices in order to comply with the sections. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeals will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment 40 TexReg 2370 May 1, 2015 Texas Register

27 or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeals do not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, do not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) , or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 a.m. to 11:00 a.m. (Central Time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority SUBCHAPTER G. CLINICAL HEALTH SERVICES 25 TAC 1.91 (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Fees for Personal Health Services. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER O. PROCUREMENT OF PROFESSIONAL SERVICES 25 TAC (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Grants and Contracts for Professional Services. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 37. MATERNAL AND INFANT HEALTH SERVICES The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of 37.13, 37.14, , , and , concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. PROPOSED RULES May 1, TexReg 2371

28 In October of 2014, the Sunset Advisory Commission issued a report titled Health and Human Services Commission and System Issues. One key recommendation that related to contracting and procurement requires HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting. At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeals will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the sections as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeals as proposed because small businesses and micro-businesses will not be required to alter their business practices in order to comply with the sections. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeals will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a major environmental rule as defined by Government Code, Major environmental rule is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeals do not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, do not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) , or by fax at (512) When submitting comments by , please specify in the subject line Comments on Proposed Rules to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 a.m. to 11:00 a.m. (central time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority SUBCHAPTER B. MARCH OF DIMES RULES ON HEALTH EDUCATION GRANTS 25 TAC 37.13, TexReg 2372 May 1, 2015 Texas Register

29 (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeals are authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeals affect Government Code, Chapter 531; and Health and Safety Code, Chapter Execution of Contracts Cancellation of Contract. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER K. EPILEPSY SERVICES 25 TAC (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Participating Providers. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER T. SCHOOL-BASED HEALTH CENTERS 25 TAC , (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeals are authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeals affect Government Code, Chapter 531; and Health and Safety Code, Chapter Competitive Process Procedures for Requests for Proposals. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 39. PRIMARY HEALTH CARE SERVICES PROGRAM SUBCHAPTER A. PRIMARY HEALTH CARE SERVICES PROGRAM 25 TAC 39.4 (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of 39.4, concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. PROPOSED RULES May 1, TexReg 2373

30 In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeal will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the section as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeal as proposed because small businesses and micro-businesses will not be required to alter their business pracsector of the state. This proposal is not specifically intended to tices in order to comply with the section. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeal will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) ; or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 am to 11:00 am (central time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rule has been reviewed by legal counsel and found to be within the state agencies' authority STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies 40 TexReg 2374 May 1, 2015 Texas Register

31 necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Provision of Contracts for Primary Health Care Services. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 49. ORAL HEALTH PROGRAM SUBCHAPTER C. PROVIDER PARTICIPATION IN FFS ORAL HEALTH TREATMENT BENEFITS 25 TAC 49.11, (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of and 49.12, concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeals will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the sections as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeals as proposed because small businesses and micro-businesses will not be required to alter their business practices in order to comply with the sections. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeals will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to PROPOSED RULES May 1, TexReg 2375

32 protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeals do not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, do not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) ; or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 a.m. to 11:00 a.m. (Central Time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority STATUTORY AUTHORITY The proposed repeals are authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeals affect Government Code, Chapter 531; and Health and Safety Code, Chapter Provider Application and Contract to Provide FFS Oral Health Treatment Services FFS Oral Health Treatment Services Provider Termination. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 56. FAMILY PLANNING 25 TAC (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of 56.17, concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter TexReg 2376 May 1, 2015 Texas Register

33 FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeal will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the section as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeal as proposed because small businesses and micro-businesses will not be required to alter their business practices in order to comply with the section. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeal will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) , or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 am to 11:00 am (Central Time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rule has been reviewed by legal counsel and found to be within the state agencies' authority STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Contract Requirements for the Title XIX (Medicaid) Family Planning Genetics Program. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 61. CHRONIC DISEASES The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of 61.6 and 61.36, concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, PROPOSED RULES May 1, TexReg 2377

34 and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeals will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the sections as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeals as proposed because small businesses and micro-businesses will not be required to alter their business practices in order to comply with the sections. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeals will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeals do not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, do not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) , or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 am to 11:00 am (central time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority SUBCHAPTER A. KIDNEY HEALTH CARE 25 TAC 61.6 (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Provider Requirements and Effective Dates. 40 TexReg 2378 May 1, 2015 Texas Register

35 TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER C. BREAST AND CERVICAL CANCER SERVICES 25 TAC (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Provider Applicant Requirements. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 83. PUBLIC HEALTH IMPROVEMENT GRANTS SUBCHAPTER A. PERMANENT FUND FOR CHILDREN AND PUBLIC HEALTH 25 TAC 83.8 (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of 83.8, concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeal will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the section as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeal as proposed because small businesses and PROPOSED RULES May 1, TexReg 2379

36 micro-businesses will not be required to alter their business practices in order to comply with the section. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeal will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) , or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 am to 11:00 am (central time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Procedures for Grant Announcements. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 417. AGENCY AND FACILITY RESPONSIBILITIES SUBCHAPTER B. CONTRACTS MANAGEMENT FOR TDMHMR FACILITIES AND CENTRAL OFFICE 25 TAC , , (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of , , and , concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilita- 40 TexReg 2380 May 1, 2015 Texas Register

37 tive Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeals will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the sections as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeals as proposed because small businesses and micro-businesses will not be required to alter their business practices in order to comply with the sections. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeals will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeals do not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, do not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) , or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 am to 11:00 am (Central Time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority STATUTORY AUTHORITY The proposed repeals are authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeals affect Government Code, Chapter 531; and Health and Safety Code, Chapter Purpose Application Definitions Procurement Accountability Provisions for All Contracts Additional Requirements for Specific Contracts Contract Extension or Renewal Award of Construction Contracts Protest and Appeal Procedures Contract Monitoring Remedies and Sections for All Contracts Except Construction Contracts. PROPOSED RULES May 1, TexReg 2381

38 References Distribution. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 419. MENTAL HEALTH SERVICES--MEDICAID STATE OPERATING AGENCY RESPONSIBILITIES SUBCHAPTER A. YOUTH EMPOWERMENT SERVICES (YES) 25 TAC (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of 419.7, concerning Provider Qualifications and Contracting. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeal will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the section as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeal as proposed because small businesses and micro-businesses will not be required to alter their business practices in order to comply with the section. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeal will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT 40 TexReg 2382 May 1, 2015 Texas Register

39 The department has determined that the proposed repeal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, does not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) , or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 am to 11:00 am (central time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rule has been reviewed by legal counsel and found to be within the state agencies' authority STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Provider Qualifications and Contracting. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 444. CONTRACT ADMINISTRA- TIVE REQUIREMENTS The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of , , , , and , concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015, issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE PROPOSED RULES May 1, TexReg 2383

40 Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeals will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the sections as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeals as proposed because small businesses and micro-businesses will not be required to alter their business practices in order to comply with the sections. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeals will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeals do not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, do not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) , or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 am to 11:00 am (central time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority SUBCHAPTER A. GENERAL PROVISIONS 25 TAC (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeals are authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeals affect Government Code, Chapter 531; and Health and Safety Code, Chapter Definitions Applicability of Chapter Waivers. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER B. FUNDING 25 TAC (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeals are authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeals affect Government Code, Chapter 531; and Health and Safety Code, Chapter Applicability of Subchapter Allocation of Funds. 40 TexReg 2384 May 1, 2015 Texas Register

41 Competitive Procurement of Client Services Selection Criteria for Request for Proposal Notice of Funding Request for Proposal (RFP) Application Application Criteria Funding Decisions Alternative Solicitation Other Funding Processes. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER C. CONTRACT ORGANIZA- TION 25 TAC (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeals are authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeals affect Government Code, Chapter 531; and Health and Safety Code, Chapter General Requirements Organizational Structure Policies and Procedures Organizational and Personnel Changes Personnel Requirements and Documentation Commission Logo and Slogan. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER D. CONTRACT ADMINISTRA- TION 25 TAC (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeals are authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeals affect Government Code, Chapter 531; and Health and Safety Code, Chapter General Contract Provisions Application of Federal and State Regulations Matching Funds Program Income Indirect Cost Expenditures Requiring Prior Approval Equipment and Supplies Minor Remodeling Subcontracting Assignments and Transfers Procurement of Goods and Services Travel Financial Eligibility and Third Party Payment Payment Requirements Cost Reimbursement for Prevention/Intervention Programs Billing for Treatment Services BHIPS Requirements Reporting Deobligation/Reobligation Contract Closeout. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER E. CONTRACT OVERSIGHT PROPOSED RULES May 1, TexReg 2385

42 25 TAC (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeals are authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeals affect Government Code, Chapter 531; and Health and Safety Code, Chapter Commission Oversight On-Site Reviews Independent Audit Report Auditor Qualifications Independent Audit Report Requirements Independent Audit Report Submission Audit Report Desk Reviews. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) CHAPTER 447. DEPARTMENT-FUNDED SUBSTANCE ABUSE PROGRAMS The Executive Commissioner of the Health and Human Services Commission (HHSC), on behalf of the Department of State Health Services (department), proposes the repeal of , , and , concerning contracting and procurement. BACKGROUND AND PURPOSE In 2003, the 78th (Regular) Texas Legislature enacted House Bill (HB) 2292, which established the Health and Human Services (HHS) system in its current configuration. In enacting this bill, the Legislature consolidated the HHS agencies under the direction of HHSC to strengthen accountability by streamlining programs and eliminating fragmentation. In October of 2014, the Sunset Advisory Commission issued a report titled "Health and Human Services Commission and System Issues." One key recommendation that related to contracting and procurement requires "HHSC to better define and strengthen its role in both procurement and contract monitoring by completing and maintaining certain statutorily required elements; strengthening monitoring of contracts at HHSC; improving assistance to system agencies; and focusing high-level attention to system contracting." At this time, HHS agencies still have separate contract and procurement rules that are specific to each entity. In order to clarify the contract and procurement requirements for all HHS agencies, HHSC has proposed new rules in 1 TAC Chapter 391, as published in the April 10, 2015 issue of the Texas Register. By direction of HHSC, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the department will repeal their specific contracting and procurement rules to further minimize confusion and increase efficiency. The department rules that are being repealed are described in the Section-by-Section Summary of this Preamble. The proposed changes to Chapter 391 are expected to ensure that procurement of goods and services effectively support HHSC's mission, operations, and programs of the HHS System. Exceptions to the general rules in Chapter 391 will be contained in HHSC's new 1 TAC Chapter 392. These exceptions will largely be comprised of HHS programs that cannot fit into the general framework of Chapter 391. SECTION-BY-SECTION SUMMARY Sections 37.13, 37.14, 83.8, , , , , , , and are being repealed because these rules are no longer utilized. Sections 1.91, 1.181, , , , 56.17, and are being repealed in order to consolidate contract and procurement requirements, as the contents of these rules are otherwise captured in current or proposed 1 TAC Chapter 391. Sections 39.4, 49.11, 49.12, 61.6, 61.36, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , and are being repealed and will be located in new 1 TAC Chapter 392 in order to consolidate program-specific exceptions to the general rules listed in Chapter 391. FISCAL NOTE Mr. Bill Wheeler, Chief Financial Officer, has determined that for each year of the first five years that the repeals will be in effect, there will be no fiscal implications to the state or local governments as a result of repealing the sections as proposed. MICRO-BUSINESS AND SMALL BUSINESS IMPACT ANALY- SIS Mr. Wheeler has also determined that there will be no adverse effect on small businesses or micro-businesses required to comply with the repeals as proposed because small businesses and micro-businesses will not be required to alter their business practices in order to comply with the sections. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There are no anticipated economic costs to persons who are required to comply with the sections as proposed. There is no anticipated negative impact on local employment. PUBLIC BENEFIT 40 TexReg 2386 May 1, 2015 Texas Register

43 In addition, Mr. Mike Maples, Deputy Commissioner, has determined that for each year of the first five years that the repeals will be in effect, the public benefit anticipated is to eliminate possible confusion caused by outdated and duplicative rules. REGULATORY ANALYSIS The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The department has determined that the proposed repeals do not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and therefore, do not constitute a taking under Government Code, PUBLIC COMMENT Comments on the proposal may be submitted by mail to Tim Bray, Office of General Counsel, Mail Code 1919, Department of State Health Services, P.O. Box , Austin, Texas ; by telephone at (512) , or by fax at (512) When submitting comments by , please specify in the subject line "Comments on Proposed Rules" to [email protected]. Comments will be accepted for 30 days following publication of the proposal in the Texas Register. PUBLIC HEARING A public hearing is scheduled for May 1, 2015, from 10:00 am to 11:00 am (central time) at the Brown-Heatly Building, Public Hearing Room, 4900 North Lamar Boulevard, Austin, Texas Persons requiring further information, special assistance, or accommodations should contact Kristine Dahlmann at (512) LEGAL CERTIFICATION The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed rules have been reviewed by legal counsel and found to be within the state agencies' authority SUBCHAPTER A. PREVENTION 25 TAC (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Interagency Collaboration and Reporting. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER B. INTERVENTION 25 TAC (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Program Descriptions. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) SUBCHAPTER C. TREATMENT 25 TAC (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Department of State Health Services or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) STATUTORY AUTHORITY The proposed repeal is authorized by Government Code, (e), and the Health and Safety Code, , PROPOSED RULES May 1, TexReg 2387

44 which authorizes the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter The proposed repeal affects Government Code, Chapter 531; and Health and Safety Code, Chapter Program Description. TRD Lisa Hernandez General Counsel Department of State Health Services For further information, please call: (512) PART 7. TEXAS MEDICAL DISCLOSURE PANEL CHAPTER 601. INFORMED CONSENT 25 TAC 601.2, 601.4, 601.6, The Texas Medical Disclosure Panel (panel) proposes amendments to 601.2, 601.4, and 601.8, concerning informed consent. BACKGROUND AND PURPOSE These amendments are proposed in accordance with the Texas Civil Practice and Remedies Code, , which requires the panel to determine which risks and hazards related to medical care and surgical procedures must be disclosed by health care providers or physicians to their patients or persons authorized to consent for their patients and to establish the general form and substance of such disclosure. Section contains the List A procedures requiring full disclosure of specific risks and hazards to patients before being undertaken; contains the disclosure and consent form for medical and surgical procedures; contains historical information; and contains the disclosure and consent form for hysterectomy. SECTION-BY-SECTION SUMMARY Proposed amendments to 601.2(g), female genital system treatments and procedures, adds the risks of injury related to the use of a power morcellator in paragraphs (1)(F) and (2)(G); retitles subsection (s), from "endoscopic surgery" to "laparoscopic/thoracoscopic surgery," adds the risks and hazards related to the use of a power morcellator; and adds a new subsection (v), plastic surgery, to the List A procedures included in this rule which require full disclosure to patients of specific risks and hazards associated with the procedure. The proposed amendments to revise the English and Spanish versions of the Disclosure and Consent Form for Medical and Surgical Procedures to add a reference to other health care providers and add risks and hazards related to the use of blood and blood products. Also, two paragraphs were deleted which reference anesthesia, and a reference to anesthesia was deleted in a third paragraph. The proposed amendment to adds historical information from rules adopted in December 2012 and January The proposed amendments to revise the English and Spanish versions of the Disclosure and Consent Form for Hysterectomy to add risks and hazards related to the use of blood and blood products and risks and hazards related to the use of a power morcellator in laparoscopic surgery. Also, two paragraphs were deleted which reference anesthesia, and a reference to anesthesia was deleted in a third paragraph. FISCAL NOTE Renee Clack, Section Director, Health Care Quality Section, has determined that for each year of the first five years that the sections will be in effect, there will be no fiscal impact to state or local governments as a result of administering the sections as proposed. SMALL AND MICRO-BUSINESS IMPACT ANALYSIS Ms. Clack also has determined that there are no anticipated economic costs to small businesses or micro-businesses that are required to comply with the amendments as proposed because regulated facilities already have an obligation to disclose risks and hazards related to medical care and surgical procedures. The amendments will not add additional costs. ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT There will be no economic costs to persons required to comply with the sections as proposed, and there will be no impact on local employment. PUBLIC BENEFIT In addition, Ms. Clack also has determined that for each year of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing or administering these amended disclosure rules will be that patients are better informed about the risks and hazards related to surgical procedures they are considering in connection with deciding whether to consent to them. REGULATORY ANALYSIS The panel has determined that this proposal is not a "major environmental rule" as defined by Texas Government Code, "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environment exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state. This proposal is not specifically intended to protect the environment or reduce risks to human health from environmental exposure. TAKINGS IMPACT ASSESSMENT The panel has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code, PUBLIC COMMENT 40 TexReg 2388 May 1, 2015 Texas Register

45 Comments on the proposal may be submitted to Pamela Adams, Program Specialist, Facility Licensing Group, Regulatory Licensing Unit, Division of Regulatory Services, Department of State Health Services, Mail Code 2835, P.O. Box , Austin, Texas , (512) , extension 2607, by fax to (512) or by to Comments will be accepted for 30 days following publication of the proposal in the Texas Register. STATUTORY AUTHORITY The amendments are authorized under the Texas Civil Practice and Remedies Code, , which provides the Texas Medical Disclosure Panel with the authority to prepare lists of medical treatments and surgical procedures that do and do not require disclosure by physicians and health care providers of the possible risks and hazards, and to prepare the form(s) for the treatments and procedures which do require disclosure. The amendments affect Texas Civil Practice and Remedies Code, Chapter Procedures Requiring Full Disclosure of Specific Risks and Hazards--List A. (a) - (f) (No change.) (g) Female genital system treatments and procedures. (1) Abdominal hysterectomy (total). (A) - (E) (No change.) (F) Injury resulting from use of a Power Morcellator in Laparoscopic surgery (see subsection (s)(2) of this section). (2) Vaginal hysterectomy. (A) - (F) (No change.) (G) Injury resulting from use of a Power Morcellator in Laparoscopic surgery (see subsection (s)(2) of this section). (3) - (16) (No change.) (h) - (r) (No change.) (s) Laparoscopic/Thoracoscopic [Endoscopic] surgery. (1) Laparoscopic/Thoracoscopic risks [Abdominal endoscopy/laparoscopy procedures]. The following shall be in addition to risks and hazards of the same surgery when done as an open procedure. (A) Damage to adjacent structures [intra-abdominal structures (e.g., bowel, bladder, blood vessels, or nerves)]. (B) Abscess [Intra-abdominal abscess] and infectious complications. (C) Trocar site complications (e.g., hematoma/bleeding, leakage of fluid, or hernia formation). [(D) Conversion of the procedure to an open procedure.] (D) [(E)] Cardiac dysfunction. (E) Postoperative pneumothorax. (F) Subcutaneous emphysema. (G) Conversion of the procedure to an open procedure. (2) Use of a power morcellator in laparoscopic surgery. (A) If cancer is present, may increase the risk of the spread of cancer. (B) Increased risk of damage to adjacent structures. [(2) Endoscopic surgery of the thorax. The following shall be in addition to risks and hazards of the same surgery when done as an open procedure.] [(A) Postoperative pneumothorax.] [(B) Subcutaneous emphysema.] [(C) Conversion of the procedure to an open procedure.] (t) - (u) (No change.) (v) Plastic surgery. (1) Augmentation mammoplasty (breast enlargement with implant). (A) Bleeding around implant. (B) Sensory changes or loss of nipple sensitivity. (C) Failure, deflation, or leaking of implant requiring replacement. (D) Worsening or unsatisfactory appearance including asymmetry (unequal size or shape). (E) Problems with or the inability to breastfeed. (F) Capsular contracture (hardening of breast). (2) Bilateral breast reduction. (A) Skin flap or fat necrosis (injury or death of skin and fat). (B) Loss of nipple or areola. (C) Sensory changes or loss of nipple sensitivity. (D) Problems with or the inability to breastfeed. (E) Worsening or unsatisfactory appearance including asymmetry (unequal size or shape or not desired size). (3) Rhinoplasty or nasal reconstruction with or without septoplasty (repairing the middle wall of the nose). (A) Development of new problems, such as perforation of the nasal septum (hole in wall between the right and left halves of the nose) or breathing difficulty. (B) Spinal fluid leak. (C) Worsening or unsatisfactory appearance. (4) Reconstruction and/or plastic surgery operations of the face and neck. (A) Impairment of regional organs, such as eye or lip function. (B) Recurrence of the original condition. (C) Worsening or unsatisfactory appearance. (5) Liposuction (removal of fat by suction). (A) Shock. (B) Pulmonary fat embolism (fat escaping with possible damage to vital organs). (C) Damage to skin with possible skin loss. (D) Loose skin. (E) Worsening or unsatisfactory appearance. PROPOSED RULES May 1, TexReg 2389

46 (6) Breast reconstruction with other flaps and/or implants. (A) Bleeding around implant. (B) Sensory changes or loss of nipple sensitivity. (C) Failure, deflation, or leaking of implant requiring replacement. (D) Damage to internal organs. (E) Worsening or unsatisfactory appearance including asymmetry (unequal size or shape). (B) Damage to blood vessels, nerves, tendons, or muscles. (7) Nipple Areolar Reconstruction. (A) Loss of graft. (B) Unsatisfactory appearance. (8) Panniculecotomy (removal of skin and fat). (A) Persistent swelling in the legs. (B) Nerve damage. (C) Worsening or unsatisfactory appearance. (9) Tendonitis, tendon release, and trigger releases. (A) Recurrence of symptoms. (C) Worsening function. (10) Breast reconstruction with flaps. (A) Damage to blood vessels, nerves, or muscles. (B) Loss of flap possibly requiring additional surgery. (C) Damage to internal organs. (D) Inability to carry pregnancy. (E) Abdominal hernias with abdominal flaps. (F) Chronic abdominal pain with abdominal flaps. (G) Worsening or unsatisfactory appearance including asymmetry (unequal size or shape). (11) Flap or graft surgery. (A) Damage to blood vessels, nerves, or muscles. (B) Deep vein thrombosis (blood clot in legs or arms). (C) Loss of flap possibly requiring additional surgery. (D) Worsening or unsatisfactory appearance. (12) Tendons, nerves, or blood vessel repair. (A) Damage to nerves. (B) Deep vein thrombosis (blood clot in legs or arms). (C) Rupture of repair. (D) Worsening of function. (13) Reconstruction and/or plastic surgical procedures of the eye and eye region, such as blepharoplasty, tumor, fracture, lacrimal surgery, foreign body, abscess, or trauma. (A) Blindness. (B) Nerve damage with loss of use and/or feeling. (C) Painful or unattractive scarring. (D) (E) Worsening or unsatisfactory appearance. Dry eye Disclosure and Consent Form. (a) The Texas Medical Disclosure Panel adopts the following form which shall be used by a physician or health care provider to inform a patient or person authorized to consent for the patient of the possible risks and hazards involved in the medical treatments and surgical procedures named in the form. Except for the procedures shown in subsection (b) of this section, the following form shall be used for the medical treatments and surgical procedures described in of this title (relating to Procedures Requiring Full Disclosure of Specific Risks and Hazards--List A). Providers shall have the form available in both English and Spanish language versions. Both versions are available from the Department of State Health Services. (1) English form. Figure: 25 TAC 601.4(a)(1) [Figure: 25 TAC 601.4(a)(1)] (2) Spanish form. Figure: 25 TAC 601.4(a)(2) [Figure: 25 TAC 601.4(a)(2)] (b) (No change.) History. (a) - (n) (No change.) (o) Effective December 5, 2012, of this title (relating to Procedures Requiring Full Disclosure of Specific Risks and Hazards- -List A) was amended to revise and include procedures and risks and hazards for the following systems: anesthesia, cardiovascular, musculoskeletal, and radiology. Section of this title (relating to Procedures Requiring No Disclosure of Specific Risks and Hazards--List B) was amended to revise and include procedures for the following systems: cardiovascular, musculoskeletal, and radiology. A Spanish language version of the Disclosure and Consent Form for Anesthesia and/or Perioperative Pain Management (Analgesia) was added to of this title (relating to Disclosure and Consent Form for Anesthesia and/or Perioperative Pain Management (Analgesia)). (p) Effective January 15, 2015, of this title (relating to Procedures Requiring Full Disclosure of Specific Risks and Hazards- -List A) was amended to revise procedures and risks and hazards for the Hematic and Lymphatic System. Additionally, a new subsection (u) was added for Dental Surgery Procedures. Section of this title (relating to Procedures Requiring No Disclosure of Specific Risks and Hazards--List B) was amended to revise procedures for anesthesia. Section of this title (relating to Disclosure and Consent Form for Anesthesia and/or Perioperative Pain Management (Analgesia) was amended to add Deep Sedation and Moderate Sedation to the anesthesia consent form. Both the English and Spanish language versions of the forms were amended Disclosure and Consent Form for Hysterectomy. The Texas Medical Disclosure Panel adopts the following form which shall be used to provide informed consent to a patient or person authorized to consent for the patient of the possible risks and hazards involved in the hysterectomy surgical procedure named in the form. This form is to be used in lieu of the general disclosure and consent form adopted in 601.4(a) of this title (relating to Disclosure and Consent Form) for disclosure and consent relating to only hysterectomy procedures. [Providers are required to use the form to obtain consent for hysterectomies performed at least 90 days following publication of this adopted section in the Texas Register.] Providers shall have the form available in both English and Spanish language versions. Both versions are available from the Department of State Health Services. 40 TexReg 2390 May 1, 2015 Texas Register

47 (1) English form. Figure: 25 TAC 601.8(1) [Figure: 25 TAC 601.8(1)] (2) Spanish form. Figure: 25 TAC 601.8(2) [Figure: 25 TAC 601.8(2)] Filed with the Office of the Secretary of State on April 15, TRD Noah Appel, M.D. Chairman Texas Medical Disclosure Panel For further information, please call: (512) TITLE 28. INSURANCE PART 1. TEXAS DEPARTMENT OF INSURANCE CHAPTER 9. TITLE INSURANCE SUBCHAPTER A. BASIC MANUAL OF RULES, RATES AND FORMS FOR THE WRITING OF TITLE INSURANCE IN THE STATE OF TEXAS 28 TAC 9.2 INTRODUCTION. The Texas Department of Insurance proposes new 28 TAC 9.2, which would adopt by reference amendments to the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas (Basic Manual). The proposed amendments create an addendum--the Texas Disclosure--to the new federal Closing Disclosure form (Closing Disclosure) and a procedural rule requiring settlement agents to use the Texas Disclosure. The Closing Disclosure helps consumers understand the costs associated with closing on a mortgage loan. The Texas Disclosure is necessary to provide a clear and complete disclosure of costs related to closing and title insurance in Texas. For over 30 years, federal law has required lenders to provide two forms to consumers at or shortly before closing on a federally insured mortgage loan: the HUD-1 and the final Truth in Lending disclosure. One major purpose of these forms is to provide effective advance disclosure of closing costs to home buyers. However, the information on these forms overlaps and the language is inconsistent. In response, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) directed the Consumer Financial Protection Bureau (CFPB) to propose a single disclosure form that combines the requirements of the HUD-1 and the Truth in Lending disclosure. See Dodd-Frank Act 1098 and 1100A, codified at 12 U.S.C. 2603(a) and 15 U.S.C. 1604(b), respectively. The CFPB adopted the Closing Disclosure and requires settlement agents to begin using it on August 1, Although the Closing Disclosure is designed to provide consumers with a better understanding of the costs of their real estate transactions, some of the changes conflict with Texas closing requirements and practices. The Texas Disclosure adds important information to fully disclose the details of closing and of title insurance transactions. The Texas Disclosure will not replace the Closing Disclosure. When the CFPB integrated the HUD-1 and the final Truth in Lending disclosure to create the new Closing Disclosure, it removed or combined items that were listed individually on the HUD-1. The Texas Disclosure requires that all relevant details are itemized, including identifying who receives any part of the title insurance premium or real estate commission, and itemizing all fees that may have been aggregated on the federal form. The Texas Disclosure also adds a signature line, which authorizes the title agent to disburse the funds. In addition, the Texas Disclosure is necessary to disclose the actual price for title insurance in a simultaneous issue transaction. In approximately half the states, including Texas, title companies offer a discount on the loan policy when both a loan policy and an owner's policy are purchased in a single transaction. However, the instructions for the Closing Disclosure require the agent to list the loan policy at the full, undiscounted premium and show the simultaneous issue discount as if it applied to the owner's policy instead. In Texas and similar states, this requirement will cause the owner's and loan policy premiums on the Closing Disclosure to differ from the actual amounts charged for each policy. While the CFPB recognized this concern, it reasoned that "the clear disclosure of the required cost for the lender's title insurance alone, and the additional incremental cost to be paid by the consumer for the optional owner's title insurance premium outweighs the benefit of a technical disclosure of the owner's and lender's title insurance premiums." Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z). While this may make sense on the Loan Estimate form when consumers are deciding whether to buy an owner's policy, once the decision has been made and the consumer comes to the closing, they are best served by seeing the actual amounts they will pay. Texas rules require complete and correct disclosure of all costs, so the Texas Disclosure is necessary to disclose the actual premiums charged. In addition to helping consumers understand real estate transaction costs, TDI auditors need complete disclosures to verify that title agents comply with state law. Texas Insurance Code and 9.1 of this title prohibit rebates, discounts, and overcharges. By detailing the amounts charged on the Texas Disclosure, title agents can show auditors that no rebates, discounts, or overcharges occurred. For example, TDI's rate rules set the premium that title agents must charge for each title insurance policy and endorsement. To ensure that title agents are not reducing premiums through escrow fee discounts, auditors must know exactly how much was charged for both the title policy and the escrow fee. The primary way for agents to show they are not charging discounted rates or fees will be by disclosing the escrow fees and other fees paid to the settlement agent on the Texas Disclosure. Section V of the Basic Manual, Specific Areas and Procedures #5, addresses overcharges, requiring that charges for pass-through expenses--such as courier fees, recording fees, and tax certificate fees--equal the cost to the title agency and PROPOSED RULES May 1, TexReg 2391

48 are not marked up. Title agents have traditionally disclosed each of these pass-through expenses, as well as fees paid to the settlement agent and all other charges, on the HUD-1 settlement statement to show consumers and auditors that they are not overcharging. The Texas Disclosure will allow title agents to continue this practice. For the reasons above, TDI proposes adoption of the new Form T-64, Texas Disclosure, and new Procedural Rule P-73, Texas Disclosure. FISCAL NOTE. Marilyn Hamilton, director of the Personal and Commercial Lines Office for the Property and Casualty Section, has determined that, for each year of the first five years the new rule and form are in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of this proposal. Additionally, Ms. Hamilton does not anticipate the proposal will have any measurable effect on local employment or the local economy. PUBLIC BENEFIT/COST NOTE. Ms. Hamilton has determined that, for each year of the first five years the rule and form are in effect, enforcing or administering the proposed rule and form will have the public benefit that consumers will receive a clear and complete disclosure of costs when they close on a real estate transaction. The rule and form also provide lenders and settlement agents with a way to show TDI auditors they are complying with state law. The new rule and form will impose minimal additional costs on entities engaged in the business of title insurance. The CFPB is requiring the new Closing Disclosure, so title agents and insurers will incur programming costs to change from the HUD-1. There may be some additional costs related specifically to the Texas Disclosure. Some companies program their own forms, while others use commercial services to produce forms, and a few use preprinted forms. The costs required to comply with the proposal may include administrative and computer programming costs. Companies may calculate the total cost of labor for each category by multiplying the number of estimated hours for each cost component by the median hourly wage for each category of labor. The median hourly wage for each category is published online by the Texas Workforce Commission as follows: (a) a computer programmer: $40.33 (b) an administrative assistant: $ Administrative expenditures may also include the cost of printing the new form. TDI expects the cost of reproducing forms to be between 6 and 8 cents per page. It is not feasible for TDI to estimate the total increased costs attributable to compliance with this proposal because of the variety of methods that companies will use to produce the new form. TDI expects that most costs should be fully compensated by the existing premium schedule. If companies experience significantly increased costs, they may provide that information in the next rate hearing. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEX- IBILITY ANALYSIS FOR SMALL AND MICRO BUSINESSES. Under Government Code (c), TDI has determined that the proposal may have an adverse economic effect on small or micro businesses resulting from the costs to comply with the proposed rule. There are approximately 570 title agents, many of which are small or micro businesses. The cost of compliance with the proposal varies between large businesses and small or micro businesses based on the number of policyholders. Costs to title agents or companies with more policyholders will total more than those with few policyholders, but may be less per customer due to volume. TDI's cost analysis and resulting estimated costs in the Public Benefit/Cost Note portion of this proposal apply equally to small and micro businesses. Under Government Code (c-1), TDI has considered other regulatory methods to accomplish the objectives of this proposal while minimizing adverse impacts on small and micro businesses. The primary purpose of this proposal is to provide a clear and accurate disclosure of real estate closing and title insurance transaction costs. Disclosing these costs helps consumers understand the transaction and also gives title agents a way to show TDI auditors that they have complied with state law. The other regulatory methods considered by TDI to accomplish the objectives of this proposal and to minimize any adverse impact on small and micro businesses include: (a) not proposing the amendments; (b) proposing different requirements for small and micro businesses; and (c) excluding small and micro businesses from this proposal. Not proposing the amendments. As previously noted, the purpose of this rule proposal is to provide consumers with a clear and accurate disclosure of real estate closing and title insurance transaction costs. If TDI did not propose this rule, consumers would not receive complete or accurate itemized disclosures when closing on a federally insured mortgage loan. Clear and accurate disclosures are important so the consumer knows exactly what they paid and to whom. The disclosure of costs is necessary to correct the way the Closing Disclosure applies the discount in a simultaneous issue transaction. The Texas Disclosure is also necessary to provide critical documentation for audits. For these reasons, TDI has rejected this option. Proposing different requirements for small and micro businesses. TDI believes that proposing different standards than those included in this proposal would not provide a better option. Consumers would not know that a small or micro business would follow different disclosure requirements. In addition, because title insurance is completely regulated in Texas, consumers and TDI auditors may be confused if some title agents provide different disclosures than others. Further, TDI has determined that the Texas Disclosure will result in minimal additional costs. The Texas Disclosure provides the least expensive means of achieving the objectives of this proposal by requiring information that is currently provided, and that can be easily calculated and provided to consumers. Creating a different requirement for small and micro businesses that would result in lower costs than the Texas Disclosure yet still serve the objectives of this proposal is not feasible. TDI believes that the potential harm of lessened regulatory requirements would outweigh the potential benefit to small or micro businesses. For these reasons, TDI has rejected this option. Excluding small and micro businesses from this proposal. If TDI excluded small and micro businesses from this proposal, they would not be required to provide the Texas Disclosure to consumers. Excluding small and micro businesses would mean that some consumers would receive a Texas Disclosure providing the additional, more accurate disclosures, and other consumers would not. TDI believes that this lack of consistency within a highly regulated industry would create potential harm to policyholders and consumers that would outweigh the potential benefit 40 TexReg 2392 May 1, 2015 Texas Register

49 to small and micro businesses. For these reasons, TDI has rejected this option. TAKINGS IMPACT ASSESSMENT. TDI has determined that no private real property interests are affected by this proposal. This proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action and so does not constitute a taking or require a takings impact assessment under Government Code REQUEST FOR PUBLIC COMMENT. If you wish to comment on this proposal you must do so in writing no later than 5 p.m., Central time, on June 1, TDI requires two copies of your comments. Send one copy to the Office of the Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box , Austin, Texas or by to [email protected] before the close of the public comment period. Send the other copy to Marilyn Hamilton, Director, Personal and Commercial Lines Office, Property and Casualty Section, Mail Code 104-PC, Texas Department of Insurance, P.O. Box , Austin, Texas or by to [email protected]. The commissioner will also consider written comments and public testimony presented in a public hearing under Docket No at 9:30 a.m., Central time, on May 27, 2015, in Room 100 of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street, Austin, Texas. STATUTORY AUTHORITY. TDI proposes 28 TAC 9.2 under Insurance Code , , , and Section provides that the commissioner may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state. Section authorizes the commissioner to adopt and enforce rules that the commissioner determines are necessary to accomplish the purposes of Title 11, Insurance Code, which concerns title insurance regulation. Section provides that a title insurance company or agent may not use a form required under Title 11 to be prescribed or approved until the commissioner has prescribed or approved the form. Section allows additions or amendments to the Basic Manual to be proposed and adopted by reference by publishing notice of the proposal and adoption in the Texas Register. CROSS REFERENCE TO STATUTE. This proposal implements the following statutes: Insurance Code , , , and Texas Disclosure. The Texas Department of Insurance adopts by reference Form T-64 and Procedural Rule P-73 as part of the Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas as amended, effective August 1, The documents are available from the Office of the Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box , Austin, Texas The documents are also available on the TDI website at Filed with the Office of the Secretary of State on April 15, TRD Sara Waitt General Counsel Texas Department of Insurance For further information, please call: (512) TITLE 34. PUBLIC FINANCE PART 1. COMPTROLLER OF PUBLIC ACCOUNTS CHAPTER 3. TAX ADMINISTRATION SUBCHAPTER O. STATE AND LOCAL SALES AND USE TAXES 34 TAC The Comptroller of Public Accounts proposes an amendment to 3.333, concerning security services. This section is amended to implement Senate Bill 1600, 82nd Legislature, 2011, relating to the registration of peace officers as private security officers, which amended Occupations Code, Subsection (a) is revised to add the subsection heading "security service" to improve the readability of the section. Subsection (b) is amended to remove Tax Code, , , , , , , , from the title of of this title, which is being revised. Subsection (h)(5)(a) is amended to correct a reference to 151 to Chapter 151. Subsection (i) is amended to correct a typographical error. In addition, paragraph (3) is amended to include a reference to the requirements in Occupations Code, that a peace officer must meet to be excepted from licensure. Subsection (j) is amended to correct a typographical error. Subsection (k)(3) is amended to remove Tax Code, , , , , , , from the title of of this title, which is being revised. Subsection (m) is amended to remove references to and of this title, which are being repealed and replaced with of this title (relating to Local Sales and Use Taxes). Tom Currah, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government. Mr. Currah also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule will be by conforming the rule to current law and agency policy and practices. This rule is proposed under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed rule. Comments on the proposal may be submitted to Teresa G. Bostick, Director, Tax Policy Division, P.O. Box 13528, Austin, Texas Comments must be received no later than 30 PROPOSED RULES May 1, TexReg 2393

50 days from the date of publication of the proposal in the Texas Register. The amendment is proposed under Tax Code, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2. The amendment implements Occupations Code, , and clarifies the application of Tax Code, Security Services. (a) Security service. Any [What a security service is. Security service means any] service for which a license is required under Occupations Code, or , Private Security Chapter, and includes any service provided within the scope of the required license as an investigations company, guard company, alarm systems company, armored car company, courier company, guard dog company, security services contractor, private security officer, detective service, private investigator, locksmith company, or private security consultant company. (b) Permit required. A provider of security services must obtain a Texas sales and use tax permit and collect tax on the total amount charged for security services, or accept a properly completed resale or exemption certificate in lieu of collecting tax. See of this title (relating to Resale Certificate; Sales for Resale [(Tax Code, , , , , , , , )]) and of this title (relating to Exemption Certificates). (c) Employees. Security services performed by an employee for his employer in the regular course of business, within the scope of the employee's duties, and for which the employee is paid his regular wages or salary are not taxable. (d) Temporary security service personnel. A security service is taxable even when provided on a temporary basis unless: (1) the security service is performed by a temporary help service for an employer to supplement the employer's existing security service personnel on a temporary basis; (2) the security service is normally performed by the employer's own employees; (3) the employer provides all supplies and equipment necessary; and (4) the temporary employee is under the direct or general supervision of the employer to whom the security service is furnished. (e) Security services provided in Texas. Charges for providing security service to property or persons located in Texas are subject to Texas sales tax. Unless a customer claims multistate benefit as provided in subsection (p) of this section, if any portion of the security service originates in Texas, Texas sales tax is due even though a portion of the service may be performed in another state. Credit will not be allowed against Texas sales tax for use tax imposed by another state when the service benefit location is in Texas. Detective and investigation services of corporate locations or premises located outside Texas are not taxable if the investigation is unrelated to any investigation of corporate locations in Texas. (f) Credit for security services originating in another state. If a security service originates in another state and sales tax is legally paid on that service in the other state, credit against the Texas use tax will be allowed. See of this title (relating to Multistate Tax Credits and Allowance of Credit for Tax Paid to Suppliers). (g) Resale certificates. (1) A seller of a security service may issue a resale certificate in lieu of tax to a supplier of tangible personal property only if care, custody, and control of the property will be transferred to the service provider's client. For example, a security service provider purchases a DVD to transfer the results of an investigation to a customer. The DVD is transferred to the customer, and the customer owns and uses the DVD to review the results of the security service. The security service provider may purchase the DVD tax free by issuing a resale certificate. Tax is due on the total amount charged the customer, including amounts for the DVD and for the services. (2) A resale certificate may be issued for a taxable service if the buyer intends to transfer the service as an integral part of a taxable service. A service will be considered an integral part of a taxable service if the service purchased is essential to the performance of the taxable service and without which the taxable service could not be rendered. (3) A resale certificate may be issued for a taxable service if the buyer intends to incorporate the service into tangible personal property that will be resold. If the entire service is not incorporated into the tangible personal property, it will be presumed the service is subject to tax and the service will be exempt only to the extent the buyer can establish the portion of the service actually incorporated into the tangible personal property. If the buyer does not intend to incorporate the entire service into the tangible personal property, no resale certificate may be issued, but credit may be claimed at the time of sale of the tangible personal property to the extent the service was actually incorporated into the tangible personal property. (h) Sales price, unrelated services. (1) Providers of taxable security services must collect state and all applicable local sales tax on the total sales price of the services provided unless they receive a properly completed resale or exemption certificate from the purchaser. (2) The total sales price includes charges for services or expenses directly related to and incurred while providing a taxable security service, even if billed separately. Examples include charges for meals, telephone calls, hotel rooms, or airplane tickets. (3) Where nontaxable unrelated services and taxable services are sold or purchased for a single charge and the portion relating to taxable services represents more than 5.0% of the total charge, the total charge is presumed to be taxable. The service provider may overcome the presumption by separately stating to the customer at the time the transaction occurs a reasonable charge for the taxable services. However, if the charge for the taxable portion of the services is not separately stated at the time of the transaction, the service provider or the purchaser may later establish for the comptroller, through documentary evidence, the percentage of the total charge that relates to nontaxable unrelated services. The service provider's books must support the apportionment between taxable and nontaxable activities based on the cost of providing the service or on a comparison to the normal charge for each service if provided alone. If the charge for nontaxable services is unreasonable when the overall transaction is reviewed, the comptroller will adjust the charges and assess additional tax, penalty, and interest on the taxable services. (4) Charges for services or expenses directly related to and incurred while providing a taxable service are taxable and may not be separated for the purpose of excluding those charges from the tax base. Examples include charges for meals, telephone calls, hotel rooms, or airplane tickets. (5) A service will be considered unrelated, and thus not part of the sales price of a taxable security service, if: 40 TexReg 2394 May 1, 2015 Texas Register

51 (A) it is not a security service, nor a service taxable under other provisions of Tax Code, Chapter [ ]151; (B) it is of a type that is commonly provided on a standalone basis; and (C) the performance of the unrelated service is distinct and identifiable. Examples of unrelated services that may be excluded from the tax base include a service for which no license is required, such as coin-wrapping services by a courier or armored car service, or providing court testimony, training, or filing legal documents. (i) Excepted persons. Persons excepted from the licensing requirements of the Private Security Act[,] are not providing security services subject to the sales tax because they are not required to hold a license to provide their services. Examples include, but are not limited to: (1) persons employed exclusively and regularly by one employer in connection with the affairs of the employer; (2) officers or employees of the United States, this state, or a political subdivision of either, while engaged in the performance of official duties; (3) persons who have full-time employment as peace officers as defined by Code of Criminal Procedure, Article 2.12, and who satisfy the requirements of Occupations Code, , and who receive compensation for private employment on an individual or an independent contractor basis as patrolmen, guards, or watchmen; (4) persons who provide telematics services (a service that may rely on global positioning system satellite data to fix the exact location of a vehicle) as defined in Occupations Code, (a), and who have satisfied exemption requirements as set out in Occupations Code, (c); (5) persons who sell burglar alarm or other protective devices exclusively over-the-counter, by mail order or by e-commerce; (6) persons who sell or install automobile burglar alarm devices; (7) persons set out in Occupations Code, (b), who provide personal emergency response systems as defined in Occupations Code, (a), that are not part of a combination of alarm systems that include burglar alarm or fire alarm; and (8) a person or firm licensed as an accountant or accounting firm under Occupations Code, Chapter 901, an owner of an accounting firm, or an employee of an accountant or accounting firm. (j) A charge for using a slim-jim or similar device to open a locked vehicle[,] is not taxable, even when the service provider is a licensed locksmith. (k) Taxable under other provisions. Persons whose activities are not defined as security services may nonetheless be performing a service that is taxable under other provisions. Examples include, but are not limited to: (1) persons engaged in the business of obtaining and furnishing credit information. See of this title (relating to Credit Reporting Services); (2) insurance adjusters, insurance investigators, and/or claims processors performing services in connection with a policy of insurance. Although not taxable as security services, some insurance services are subject to sales and use tax. See of this title (relating to Insurance Services); (3) persons who install electronic access control devices, as that term is defined in Occupations Code, (a)(6-a) in existing nonresidential improvements to real property. Although not taxable as a security service, the installation of such a device in an existing nonresidential real property improvement may be taxable as nonresidential real property repair, remodeling or restoration. See of this title (relating to Nonresidential Real Property Repair, Remodeling, and Restoration; Real Property Maintenance [(Tax Code, , , , , , , )]). (l) Undercover agents. The fact that a security service provider may be performing his services by furnishing an undercover agent will not affect the applicability of sales tax to the service transaction between the employer and the consumer. The employer of the undercover agent is considered to be providing security services to a client, and that transaction is subject to the sales tax. (m) Local taxes. Local sales and use taxes (city, county, transit authority, and special purpose district) apply to services in the same way as they apply to tangible personal property. A service provider must collect local sales taxes if the service provider's place of business is within a local taxing jurisdiction, even if the service is actually provided at a location outside that jurisdiction. If the place of business is outside such a jurisdiction but the service is provided to a customer within a local taxing jurisdiction, local use taxes apply and the service provider is responsible for collecting them. For information on the collection and reporting responsibilities of providers and purchasers of taxable services, see of this title (relating to Local Sales and Use Taxes) [ of this title (relating to Collection and Allocation of the City Sales Tax) and of this title (relating to City Use Tax)]. (n) Use tax. If a seller of a service is not engaged in business in Texas or in a specific local taxing jurisdiction and is not required to collect Texas state or local tax, it is the Texas customer's responsibility to report the use tax directly to this office. (o) Service benefit location. If the security service provider is in Texas and the customer is located only in Texas, Texas tax is due, and must be collected by the security service provider. (p) Service benefit location--multistate customer. (1) To the extent a security service is provided for a separate, identifiable segment of a customer's business, the service is presumed to benefit the location where that part of the customer's business is conducted. (2) To the extent the use of the service cannot be assigned to an identifiable segment of a customer's business, the service is presumed to be used to support the administration or operation of the customer's business generally. The security service is presumed to be used at the customer's principal place of business. The principal place of business means the place from which the trade or business is directed or managed. (3) If a multistate customer claims that part of the security service benefits the customer's business at locations both within and outside the state, the customer must provide the security service provider with an exemption certificate in lieu of tax. It will then be the customer's responsibility to report the tax to this office for that portion of the security service that benefits Texas locations. The security service will not be taxable to the extent the customer can establish benefit outside Texas. A multistate customer may use any reasonable method for allocation that is supported by business records. (4) A security service provider who accepts an exemption certificate in good faith is relieved of responsibility for collecting and remitting tax on transactions to which the certificate relates. PROPOSED RULES May 1, TexReg 2395

52 Filed with the Office of the Secretary of State on April 15, TRD Lita Gonzalez General Counsel Comptroller of Public Accounts For further information, please call: (512) SUBCHAPTER V. FRANCHISE TAX 34 TAC (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the Comptroller of Public Accounts or in the Texas Register office, James Earl Rudder Building, 1019 Brazos Street, Austin, Texas.) The Comptroller of Public Accounts proposes the repeal of 3.597, concerning margin: business tax advisory committee. This section is being repealed because Tax Code, , which created the Business Tax Advisory Committee, expired January 31, Tom Currah, Chief Revenue Estimator, has determined that repeal of the rule will not result in any fiscal implications to the state or to units of local government. Mr. Currah also has determined the repeal would benefit the public by removing from the Administrative Code provisions that have expired and that otherwise might misinform or confuse users of that Code. There would be no anticipated significant economic cost to the public. This repeal is adopted under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There are no additional costs to persons who are required to comply with the repeal. Comments on the repeal may be submitted to Teresa Bostick, Division Director, Tax Policy Division, P.O. Box 13528, Austin, Texas This repeal is proposed under Tax Code, , which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title Margin: Business Tax Advisory Committee. TRD Lita Gonzalez General Counsel Comptroller of Public Accounts For further information, please call: (512) TITLE 37. PUBLIC SAFETY AND CORREC- TIONS PART 5. TEXAS BOARD OF PARDONS AND PAROLES CHAPTER 145. PAROLE SUBCHAPTER A. PAROLE PROCESS 37 TAC , The Texas Board of Pardons and Paroles proposes amendments to 37 TAC Chapter 145, Subchapter A, and , concerning parole process. The amendments are proposed to update the statutory reference in 145.1, update the language in and 145.3, and correct the address for requests for special review in Rissie Owens, Chair of the Board, determined that for each year of the first five-year period the proposed amendments are in effect, no fiscal implications exist for state or local government as a result of enforcing or administering these sections. Ms. Owens also has determined that for each year of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of enforcing the amendments to these sections will be to clarify the procedures in the parole process. There will be no effect on small businesses. There is no anticipated economic cost to persons required to comply with the amended rules as proposed. An Economic Impact Statement and Regulatory Flexibility Analysis is not required because the proposed amendments will not have an economic effect on small businesses as defined in Texas Government Code (2). Comments should be directed by mail to Bettie Wells, General Counsel, Texas Board of Pardons and Paroles, 209 W. 14th Street, Suite 500, Austin, Texas or by to [email protected]. Written comments from the general public should be received within 30 days of the publication of this proposal. The amended rules are proposed under Texas Government Code , , , , and Section requires the board to adopt rules relating to the decision-making processes used by the board and parole panels. Section and authorize the Board to adopt reasonable rules as proper or necessary relating to the eligibility of an offender for release to mandatory supervision and to act on matters of release to mandatory supervision. Section provides the board authority to adopt policy establishing the date on which the board may reconsider for release an inmate who has previously been denied release. Section provides authority for the discretionary release of offenders on mandatory supervision. No other statutes, articles, or codes are affected by these amendments Parole Decision-Maker. (a) Unless otherwise provided, parole decisions shall be made by two-thirds vote of a parole panel. The board is the parole release decision-maker of persons convicted of a capital felony offense, who are eligible for parole, or an offense under 20A.03, 21.02, 21.11(a)(1), , or who is required under Texas Government Code Section (c) to serve 35 calendar years before becoming eligible for pa- 40 TexReg 2396 May 1, 2015 Texas Register

53 role review [12.42(c)(2) of the Penal Code]. In these cases, the board may grant parole only upon a two-thirds vote. The board is not required to meet as a body to perform this duty. (b) (No change.) Standard Parole Guidelines. (a) - (b) (No change.) (c) The adoption and use of the parole guidelines does not imply the creation of any parole release formula, or a right or expectation by an offender to parole based upon the guidelines. The risk assessment instrument and the offense severity scale, while utilized for research and reporting, are not to be construed so as to mandate either a favorable or unfavorable parole decision. The parole guidelines serve as an aid in the parole decision process and the parole decision shall be at the discretion of the board and the voting parole panel. (d) (No change.) Policy Statements Relating to Parole Release Decisions by the Board of Pardons and Paroles. To aid the board in its analysis and research of parole release, the board adopts the following policies. (1) Release to parole is a privilege, not an offender right, and the parole decision maker is vested with complete discretion to grant, or to deny parole release as defined by statutory law. (A) Candidates for parole are to be evaluated on an individual basis. (B) There are no mandatory rules or guidelines that must be followed in every case because each offender is unique. The board and parole commissioners have the statutory duty to make release decisions which are only in the best interest of society. The board and parole [Parole] panels use parole guidelines as a tool to aid in the discretionary parole decision process. (2) The board will reconsider for release an offender other than an offender serving a sentence for an offense listed in Texas Government Code, Section (a), as soon as practicable after the first anniversary of the date of denial[, provided the decision to deny parole is on or after January 1, 2004, and the offender is otherwise eligible for consideration]. (3) The board will reconsider for release an offender who is [not] serving a sentence for an offense under Texas Government Code, Section (a), or second or third degree under Texas Penal Code, Section 22.04, after the first anniversary date of the denial and end before the fifth anniversary date of the denial, but in no event shall it be less than one calendar year from the panel decision date. (4) - (5) (No change.) Action upon Special Review--Release Denied. (a) - (c) (No change.) (d) All requests for special review shall be filed with the Texas Board of Pardons and Paroles, Board Administrator, 8610 Shoal Creek Blvd. [P.O. Box 13401], Austin, Texas [78711]. (e) - (j) (No change.) TRD Bettie Wells General Counsel Texas Board of Pardons and Paroles For further information, please call: (512) SUBCHAPTER B. OF PAROLE 37 TAC , TERMS AND CONDITIONS The Texas Board of Pardons and Paroles proposes amendments to and concerning terms and conditions of parole. The amendments are proposed to correct the references to the Correctional Institutions Division in and to replace "card" with "certificate" as indicated in Chapter 521 of the Texas Transportation Code. Rissie Owens, Chair of the Board, determined that for each year of the first five-year period the proposed amendments are in effect, no fiscal implications exist for state or local government as a result of enforcing or administering these sections. Ms. Owens also has determined that for each year of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of enforcing the amendments to these sections will be to clarify the terms and conditions of parole. There will be no effect on small businesses. There is no anticipated economic cost to persons required to comply with the amended rules as proposed. An Economic Impact Statement and Regulatory Flexibility Analysis is not required because the proposed amendments will not have an economic effect on small businesses as defined in Texas Government Code (2). Comments should be directed to Bettie Wells, General Counsel, Texas Board of Pardons and Paroles, 209 W. 14th Street, Suite 500, Austin, Texas or by to [email protected]. Written comments from the general public should be received within 30 days of the publication of this proposal. The amendments are proposed under Texas Government Code , , and Section provides the board with the authority to adopt rules relating to the decision-making processes used by the board and parole panels. Section provides the board with the authority to adopt reasonable rules as proper or necessary relating to the eligibility of an inmate for release on parole or release to mandatory supervision. Section provides the board with the authority to consider and order release on parole. No other statutes, articles, or codes are affected by these amendments Parole in Absentia (Parole Review and Mandatory Supervision for Offenders Not in Actual Physical Custody of the TDCJ-CID [TDCJ CID]). Offenders serving state prison sentences for Texas crimes and offenders whose parole or mandatory supervision has been revoked who are not in the actual physical custody of the TDCJ-CID [TDCJ CID] are subject to the parole review process as set out in this chapter and title in accord with the following. (1) Parole in absentia processing is initiated [by the assigned CID staff] upon referral from the county of conviction when PROPOSED RULES May 1, TexReg 2397

54 all necessary pen packet documents have been compiled and presented to the TDCJ-CID [CID]. (2) Prior to consideration for parole by the parole panel, the offender may be interviewed [by a representative of the CID] for the purpose of obtaining a parole release plan and completion of a parole in absentia summary in order that the parole panel may make an informed decision concerning parole release suitability ( of this title, relating to Action upon Review; of this title, relating to Action upon Special Review--Release Approved; and of this title, relating to Action upon Special Review--Release Denied). (3) (No change.) Personal Identification Program. (a) Any person released to parole or mandatory supervision who does not hold a Texas driver's license shall participate in the Texas Department of Public Safety Personal Identification Certificate [Card] Program under Chapter 521 of the Texas Transportation Code. (b) Participation shall be deemed satisfactory if the releasee has in possession at all times a valid Texas driver's license or personal identification certificate [card] duly issued by the Texas Department of Public Safety. (c) All persons on release to parole or mandatory supervision shall comply with all applicable laws, rules and regulations in connection with the Texas Department of Public Safety Driver's License Program or the Personal Identification Certificate [Card] Program. (d) (No change.) TRD Bettie Wells General Counsel Texas Board of Pardons and Paroles For further information, please call: (512) PART 6. TEXAS DEPARTMENT OF CRIMINAL JUSTICE CHAPTER 163. COMMUNITY JUSTICE ASSISTANCE DIVISION STANDARDS 37 TAC The Texas Board of Criminal Justice proposes amendments to , concerning Distribution of Community Corrections Funding. This review is conducted pursuant to Texas Government Code , which requires rule review every four years. The proposed amendments are necessary to update the rule's formatting. Jerry McGinty, Chief Financial Officer for the Texas Department of Criminal Justice, has determined that for each year of the first five years the rule will be in effect, enforcing or administering the rule will not have foreseeable implications related to costs or revenues for state or local government. Mr. McGinty has also determined that for each year of the first five-year period, there will not be an economic impact on persons required to comply with the rule. There will not be an adverse economic impact on small or micro businesses. Therefore, no regulatory flexibility analysis is required. The anticipated public benefit, as a result of enforcing the rule, will be to update the existing rule language. Comments should be directed to Sharon Felfe Howell, General Counsel, Texas Department of Criminal Justice, P.O. Box 4004, Huntsville, Texas 77342, [email protected]. Written comments from the general public should be received within 30 days of the publication of this rule. The amendments are proposed under Texas Government Code and Cross Reference to Statutes: Texas Government Code and Distribution of Community Corrections Funding. Community corrections funding shall be distributed in accordance with applicable law and Texas Department of Criminal Justice [TDCJ] rules and policy. TRD Sharon Howell General Counsel Texas Department of Criminal Justice For further information, please call: (936) PART 13. TEXAS COMMISSION ON FIRE PROTECTION CHAPTER 423. FIRE SUPPRESSION The Texas Commission on Fire Protection (the commission) proposes amendments to Chapter 423, Fire Suppression, concerning , International Fire Service Accreditation Congress (IFSAC) Seal, and , International Fire Service Accreditation Congress (IFSAC) Seal. The purpose of the proposed amendments is to add an expiration date for current rule language regarding grandfathering for obtaining International Fire Service Accreditation Congress (IF- SAC) Seals. Tim Rutland, Executive Director, has determined that for each year of the first five year period the proposed amendments are in effect, there will be no fiscal impact on state or local governments. Mr. Rutland has also determined that for each year of the first five years the proposed amendments are in effect, the public benefit from the passage is clear and concise rules regarding the requirements for obtaining IFSAC Seals. There will be no effect on micro businesses, small businesses or persons required to comply with the amended sections as proposed; therefore, no regulatory flexibility analysis is required. 40 TexReg 2398 May 1, 2015 Texas Register

55 Comments regarding the proposed amendments may be submitted, in writing, within 30 days following the publication of this notice in the Texas Register to Tim Rutland, Executive Director, Texas Commission on Fire Protection, P.O. Box 2286, Austin, Texas or ed to Comments will be reviewed and discussed at a future commission meeting. SUBCHAPTER A. MINIMUM STANDARDS FOR STRUCTURE FIRE PROTECTION PERSONNEL CERTIFICATION 37 TAC The amendments are proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties. The proposed amendments implement Texas Government Code, Chapter 419, International Fire Service Accreditation Congress (IFSAC) Seal. (a) Individuals holding a current commission [Commission] Structure Fire Protection Personnel certification received prior to March 10, 2003, may be granted International Fire Service Accreditation Congress (IFSAC) seals for Hazardous Materials Awareness Level Personnel, Hazardous Materials Operations Level Responders, Fire Fighter I, and Fire Fighter II by making application to the commission [Commission] for the IFSAC seals and paying applicable fees. This subsection will expire on August 1, (b) Individuals completing a commission [Commission-]approved basic fire suppression program, meeting any other NFPA requirement, and passing the applicable examination(s) based on the basic fire suppression curriculum, may be granted IFSAC seal(s) for Hazardous Materials Awareness Level Personnel, Hazardous Materials Operations Level Responders (including the Mission-Specific Competencies for Personal Protective Equipment and Product Control), Fire Fighter I, and/or Fire Fighter II by making application to the commission [Commission] for the IFSAC seal(s) and paying applicable fees, provided they meet the following provisions:[;] (1) To receive the IFSAC Hazardous Materials Awareness Level Personnel seal, the individual must: (A) complete the Hazardous Materials Awareness section of a commission [Commission-]approved course; and (B) pass the Hazardous Materials Awareness section of a commission [Commission] examination. (2) To receive the IFSAC Hazardous Materials Operations Level Responders seal (including the Mission-Specific Competencies for Personal Protective Equipment and Product Control) the individual must: (A) complete the Hazardous Materials Operation section of a commission [Commission-]approved course; (B) document possession of an IFSAC Hazardous Materials Awareness Level Personnel seal; and (C) pass the Hazardous Materials Operations section of a commission [Commission] examination. (3) To receive the IFSAC Fire Fighter I seal, the individual must: (A) complete a commission [Commission-]approved Fire Fighter I course; (B) provide medical documentation as outlined in subsection (c) of this section; (C) document possession of an IFSAC Hazardous Materials Awareness Level Personnel seal; and (D) document possession of an IFSAC Hazardous Materials Operations Level Responders seal; and (E) pass the Fire Fighter I section of a commission [Commission] examination. (4) To receive the IFSAC Fire Fighter II seal, the individual must: (A) complete a commission [Commission-]approved Fire Fighter II course; (B) document possession of an IFSAC Fire Fighter I seal; and (C) pass the Fire Fighter II section of a commission [Commission] examination. (c) In order to meet the medical requirements of NFPA 1001, the individual must document successful completion of an emergency medical training course or program. The commission [Commission] recognizes the following emergency medical training: (1) The Texas Department of State Health Services Emergency Medical Service Personnel certification training; (2) American Red Cross Response course (including optional lessons and enrichment sections); (3) American Safety and Health Institute First Responder course; (4) National Registry of Emergency Medical Technicians certification; or (5) medical training deemed equivalent by the commission. [Commission.] TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) SUBCHAPTER B. MINIMUM STANDARDS FOR AIRCRAFT RESCUE FIRE FIGHTING PERSONNEL 37 TAC The amendments are proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties. The proposed amendments implement Texas Government Code, Chapter 419, PROPOSED RULES May 1, TexReg 2399

56 International Fire Service Accreditation Congress (IF- SAC) Seal. (a) Individuals holding a current commission Aircraft Rescue Fire Fighting Personnel certification received prior to March 10, 2003, may be granted an International Fire Service Accreditation Congress (IFSAC) seal as an Airport Fire Fighter by making application to the commission for the IFSAC seal and paying applicable fees. This subsection will expire on August 1, (b) Individuals completing a commission [commission-]approved basic aircraft rescue fire suppression program, documenting an IFSAC seal for Fire Fighter II, and passing the applicable state examination may be granted an IFSAC seal as an Airport Fire Fighter by making application to the commission for the IFSAC seal and paying applicable fees. TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) CHAPTER 425. FIRE SERVICE INSTRUCTORS 37 TAC The Texas Commission on Fire Protection (the commission) proposes amendments to Chapter 425, Fire Service Instructors, concerning , International Fire Service Accreditation Congress (IFSAC) Seal. The purpose of the proposed amendments is to clarify the requirements for obtaining an International Fire Service Accreditation Congress (IFSAC) Seal for Instructor and to add an expiration date for current rule language regarding grandfathering for obtaining International Fire Service Accreditation Congress (IF- SAC) Seals. Tim Rutland, Executive Director, has determined that for each year of the first five-year period the proposed amendments are in effect, there will be no fiscal impact on state or local governments. Mr. Rutland has also determined that for each year of the first five years the proposed amendments are in effect, the public benefit from the passage is clear and concise rules regarding requirements for obtaining an Instructor IFSAC Seal. There will be no effect on micro businesses, small businesses or persons required to comply with the amended section as proposed; therefore, no regulatory flexibility analysis is required. Comments regarding the proposed amendments may be submitted, in writing, within 30 days following the publication of this notice in the Texas Register to Tim Rutland, Executive Director, Texas Commission on Fire Protection, P.O. Box 2286, Austin, Texas or ed to [email protected]. Comments will be reviewed and discussed at a future commission meeting. The amendments are proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties. The proposed amendments implement Texas Government Code, Chapter 419, International Fire Service Accreditation Congress (IFSAC) Seal. (a) Individuals who hold commission Instructor I certification prior to March 1, 2006 may be granted an IFSAC seal for Instructor I by making application to the commission and paying the applicable fee before August 1, Individuals [or individuals] completing a commission approved Fire Service Instructor I training program and passing the applicable state examination may be granted an IFSAC seal for Instructor I by making application to the commission and paying the applicable fee. (b) Individuals who hold commission Instructor II certification prior to March 1, 2006 may be granted an IFSAC seal for Instructor II by making application to the commission and paying the applicable fee before August 1, Individuals [or individuals] holding an IFSAC Instructor I seal, [certification,] completing a commission approved Fire Service Instructor II training program, and passing the applicable state examination may be granted an IFSAC seal for Instructor II by making application to the commission and paying the applicable fee. (c) Individuals who hold commission Instructor III certification prior to March 1, 2006 may be granted an IFSAC seal for Instructor III by making application to the commission and paying the applicable fee before August 1, Individuals [or individuals] holding an IFSAC Instructor II seal, [certification,] completing a commission approved Fire Service Instructor III training program, and passing the applicable state examination may be granted an IFSAC seal for Instructor III by making application to the commission and paying the applicable fee. TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) CHAPTER 429. MINIMUM STANDARDS FOR FIRE INSPECTOR CERTIFICATION 37 TAC The Texas Commission on Fire Protection (the commission) proposes amendments to Chapter 429, Minimum Standards For Fire Inspector Certification, concerning , International Fire Service Accreditation Congress (IFSAC) Seal. The purpose of the proposed amendments is to add an expiration date for current rule language regarding the grandfathering for obtaining International Fire Service Accreditation Congress (IFSAC) Seals. Tim Rutland, Executive Director, has determined that for each year of the first five-year period the proposed amendments are 40 TexReg 2400 May 1, 2015 Texas Register

57 in effect, there will be no fiscal impact on state or local governments. Mr. Rutland has also determined that for each year of the first five years the proposed amendments are in effect, the public benefit from the passage is clear and concise rules regarding requirements for obtaining an Inspector IFSAC Seal. There will be no effect on micro businesses, small businesses or persons required to comply with the amended section as proposed; therefore, no regulatory flexibility analysis is required. Comments regarding the proposed amendments may be submitted, in writing, within 30 days following the publication of this notice in the Texas Register to Tim Rutland, Executive Director, Texas Commission on Fire Protection, P.O. Box 2286, Austin, Texas or ed to Comments will be reviewed and discussed at a future commission meeting. The amendments are proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties. The proposed amendments implement Texas Government Code, Chapter 419, International Fire Service Accreditation Congress (IF- SAC) Seal. (a) Individuals who hold commission Fire Inspector certification prior to January 1, 2005, may be granted International Fire Service Accreditation Congress (IFSAC) seals for Inspector I and Inspector II by making application to the commission for the IFSAC seals and paying applicable fees. This subsection will expire on August 1, (b) Individuals who hold commission Fire Inspector certification prior to January 1, 2005, may apply to test for Plan Examiner I. Upon successful completion of the examination an IFSAC seal for Plan Examiner I may be granted by making application to the commission for the IFSAC seal and paying the applicable fee. (c) Individuals who pass the applicable section of the state examination on or after January 1, 2005, may be granted IFSAC seal(s) for Inspector I, Inspector II, and/or Plan Examiner I by making application to the commission for the IFSAC seal(s) and paying the applicable fees, provided they meet the following provisions: (1) To receive the IFSAC Inspector I seal, the individual must: (A) complete the Inspector I section of a commission [commission-]approved course; and (B) pass the Inspector I section of a commission examination. (2) To receive the IFSAC Inspector II seal, the individual must: (A) complete the Inspector II section of a commission [commission-]approved course; (B) document possession of an IFSAC Inspector I seal; and (C) pass the Inspector II section of a commission examination. (3) To receive the IFSAC Plan Examiner I seal, the individual must: (A) complete the Plan Examiner I section of a commission [commission-]approved course; and (B) pass the Plan Examiner I section of a commission examination. TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) CHAPTER 431. FIRE INVESTIGATION The Texas Commission on Fire Protection (the commission) proposes amendments to Chapter 431, Fire Investigation, concerning , International Fire Service Accreditation Congress (IFSAC) Seal, and , International Fire Service Accreditation Congress (IFSAC) Seal--Fire Investigator. The purpose of the proposed amendments is to add an expiration date for current rule language regarding grandfathering for obtaining International Fire Service Accreditation Congress (IF- SAC) Seals. Tim Rutland, Executive Director, has determined that for each year of the first five-year period the proposed amendments are in effect, there will be no fiscal impact on state or local governments. Mr. Rutland has also determined that for each year of the first five years the proposed amendments are in effect, the public benefit from the passage is clear and concise rules regarding obtaining Arson Investigator and Fire Investigator IFSAC Seals. There will be no effect on micro businesses, small businesses or persons required to comply with the amended section as proposed; therefore, no regulatory flexibility analysis is required. Comments regarding the proposed amendments may be submitted, in writing, within 30 days following the publication of this notice in the Texas Register to Tim Rutland, Executive Director, Texas Commission on Fire Protection, P.O. Box 2286, Austin, Texas or ed to [email protected]. Comments will be reviewed and discussed at a future commission meeting. SUBCHAPTER A. MINIMUM STANDARDS FOR ARSON INVESTIGATOR CERTIFICATION 37 TAC The amendments are proposed under Texas Government Code, Chapter 419, and , which provides the commission the authority to propose rules for the administration of its powers and duties and the authority to appoint Arson and Fire Investigator Personnel. The proposed amendments implement Texas Government Code, Chapter 419, and International Fire Service Accreditation Congress (IFSAC) Seal. (a) Individuals holding a current commission Arson Investigator certification received prior to March 10, 2003 may be granted an International Fire Service Accreditation Congress (IFSAC) seal as a PROPOSED RULES May 1, TexReg 2401

58 Fire Investigator by making application to the commission for the IF- SAC seal and paying applicable fees. This subsection will expire on August 1, (b) Individuals completing a commission [commission-]approved basic fire investigator program and passing the applicable state examination may be granted an IFSAC seal as a Fire Investigator by making application to the commission for the IFSAC seal and paying applicable fees. TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) SUBCHAPTER B. MINIMUM STANDARDS FOR FIRE INVESTIGATOR CERTIFICATION 37 TAC The amendments are proposed under Texas Government Code, Chapter 419, and , which provides the commission the authority to propose rules for the administration of its powers and duties and the authority to appoint Arson and Fire Investigator Personnel. The proposed amendments implement Texas Government Code, Chapter 419, and International Fire Service Accreditation Congress (IF- SAC) Seal--Fire Investigator. (a) Individuals holding a current commission Fire Investigator certification received prior to March 10, 2003 may be granted an International Fire Service Accreditation Congress (IFSAC) seal as a Fire Investigator by making application to the commission for the IF- SAC seal and paying applicable fees. This subsection will expire on August 1, (b) Individuals completing a commission [commission-]approved basic fire investigator program and passing the applicable state examination may be granted an IFSAC seal as a Fire Investigator by making application to the commission for the IFSAC seal and paying applicable fees. TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) CHAPTER 433. MINIMUM STANDARDS FOR DRIVER/OPERATOR-PUMPER 37 TAC The Texas Commission on Fire Protection (the commission) proposes an amendment to Chapter 433, Minimum Standards For Driver/Operator-Pumper, concerning 433.7, International Fire Service Accreditation Congress (IFSAC) Seal. The purpose of the proposed amendment is to add an expiration date for current rule language regarding the grandfathering for obtaining International Fire Service Accreditation Congress (IF- SAC) Seals. Tim Rutland, Executive Director, has determined that for each year of the first five-year period the proposed amendments are in effect, there will be no fiscal impact on state or local governments. Mr. Rutland has also determined that for each year of the first five years the proposed amendment is in effect, the public benefit from the passage is clear and concise rules regarding requirements for obtaining a Driver/Operator-Pumper IFSAC Seal. There will be no effect on micro businesses, small businesses or persons required to comply with the amended section as proposed; therefore, no regulatory flexibility analysis is required. Comments regarding the proposed amendment may be submitted, in writing, within 30 days following the publication of this notice in the Texas Register to Tim Rutland, Executive Director, Texas Commission on Fire Protection, P.O. Box 2286, Austin, Texas or ed to [email protected]. Comments will be reviewed and discussed at a future commission meeting. The amendment is proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties. The proposed amendment implements Texas Government Code, Chapter 419, International Fire Service Accreditation Congress (IFSAC) Seal. (a) Individuals holding a current commission Driver/Operator-Pumper certification received prior to March 10, 2003, may be granted an International Fire Service Accreditation Congress (IFSAC) seal as a Driver/Operator-Pumper by making application to the commission for the IFSAC seal and paying the applicable fees. This subsection will expire on August 1, (b) Individuals completing a commission [commission-]approved driver/operator-pumper program; documenting, as a minimum, an IFSAC seal for Fire Fighter I; and passing the applicable state examination may be granted an IFSAC seal as a Driver/Operator-Pumper by making application to the commission for the IFSAC seal and paying applicable fees. TRD TexReg 2402 May 1, 2015 Texas Register

59 Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) CHAPTER 435. FIRE FIGHTER SAFETY 37 TAC 435.1, The Texas Commission on Fire Protection (the commission) proposes an amendment to Chapter 435, Fire Fighter Safety, concerning 435.1, Protective Clothing, and new , concerning Federal Highway Administration Traffic Incident Management Program. The purpose of the proposed amendment is to clarify requirements regarding conducting risk assessments in accordance with National Fire Protection Association (NFPA) 1851 standards. The new section is proposed to require that all certified fire protection personnel complete the Federal Highway Administration Traffic Incident Management Program prior to the December 1, 2020, deadline. Tim Rutland, Executive Director, has determined that for each year of the first five-year period the proposed amendments are in effect, there will be no fiscal impact on state or local governments. Mr. Rutland has also determined that for each year of the first five years the proposed amendment and new section are in effect, the public benefit from the passage is clear and concise rules regarding requirements of personnel protective clothing and continuing education for all certified fire protection personnel. There will be no effect on micro businesses, small businesses or persons required to comply with the amended section as proposed; therefore, no regulatory flexibility analysis is required. Comments regarding the proposal may be submitted, in writing, within 30 days following the publication of this notice in the Texas Register to Tim Rutland, Executive Director, Texas Commission on Fire Protection, P.O. Box 2286, Austin, Texas or ed to Comments will be reviewed and discussed at a future commission meeting. The amendment and new section are proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties; and and , requiring all protective clothing comply with the minimum standards of the National Fire Protection Association. The proposed amendments implement Texas Government Code, Chapter 419, , , and Protective Clothing. A regulated fire department shall: (1) purchase, provide, and maintain a complete set of protective clothing for all fire protection personnel who would be exposed to hazardous conditions from fire or other emergencies or where the potential for such exposure exists. A complete set of protective clothing shall consist of garments including bunker coats, bunker pants, boots, gloves, helmets, and protective hoods, worn by fire protection personnel in the course of performing fire-fighting operations; (2) ensure that all protective clothing which is [are] used by fire protection personnel assigned to fire suppression duties comply with the minimum standards of the National Fire Protection Association suitable for the tasks the individual is expected to perform. The National Fire Protection Association standard applicable to protective clothing is the standard in effect at the time the entity contracts for new, rebuilt, or used protective clothing; and (3) maintain and provide upon request by the commission, a departmental standard operating procedure regarding the use, selection, care, and maintenance of protective clothing which complies with NFPA 1851, Standard on Selection, Care, and Maintenance of Structural Fire Fighting Protective Ensembles. (4) To ensure that protective clothing for fire protection personnel continues to be suitable for assigned tasks, risk assessments conducted in accordance with NFPA 1851 shall be reviewed and revised as needed, but in any case not more than five years following the date of the last risk assessment Federal Highway Administration Traffic Incident Management Program. (a) In an effort to improve firefighter safety in the State of Texas, all regulated entities will ensure that the Federal Highway Administration Traffic Incident Management program or an equivalent course that is approved by the commission be completed as part of the continuing education required for certified fire protection personnel by December 1, Individuals will be credited with four hours of continuing education credit for completing this program. (b) All regulated fire protection personnel must complete the Federal Highway Administration Traffic Incident Management program or an equivalent course that is approved by the commission prior to December 1, (c) All fire protection personnel appointed after December 1, 2020 will be required to complete the Federal Highway Administration Traffic Incident Management program training or an equivalent course that is approved by the commission within one year of appointment to a fire department. (d) Departments will report the completion of training through the commission's web based reporting system. (e) Failure to complete the Federal Highway Administration Traffic Incident Management program or an equivalent course that is approved by the commission before the required deadline will be considered a violation of continuing education rules found in Chapter 441 of this title (relating to Continuing Education). TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) CHAPTER 441. CONTINUING EDUCATION 37 TAC The Texas Commission on Fire Protection (the commission) proposes an amendment to Chapter 441, Continuing Education, PROPOSED RULES May 1, TexReg 2403

60 441.19, concerning Continuing Education for Head of a Fire Department. The purpose of the proposed amendment is to establish requirements regarding continuing education for fire protection personnel certified as head of a fire department. Tim Rutland, Executive Director, has determined that for each year of the first five-year period the proposed amendment is in effect, there will be no fiscal impact on state or local governments. Mr. Rutland has also determined that for each year of the first five years the proposed amendment is in effect, the public benefit from the passage is clear and concise rules requiring specific continuing education requirements for fire protection personnel certified as head of a fire department. There will be no effect on micro businesses, small businesses or persons required to comply with the amended section as proposed; therefore, no regulatory flexibility analysis is required. Comments regarding the proposed amendment may be submitted, in writing, within 30 days following the publication of this notice in the Texas Register by mail to Tim Rutland, Executive Director, Texas Commission on Fire Protection, P.O. Box 2286, Austin, Texas or by to [email protected]. Comments will be reviewed and discussed at a future commission meeting. The amendments are proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties; and , which gives the commission the authority for appointing fire protection personnel. The proposed amendments implement Texas Government Code, Chapter 419, and Continuing Education for Head of a Fire Department. (a) A minimum of twenty [two] hours of continuing education [in fire administration subjects] in addition to the continuing education requirements in 441.5(b) of this title (relating to Requirements) will be required for personnel certified as head of a fire department and who are appointed as head of a department. The twenty hours of continuing education shall include: (1) ten hours in emergency operations subjects; and (2) ten hours in fire administration subjects. These subjects may include emergency management, leadership, budget and finance, labor relations, human resources and personnel management, collective bargaining, conflict resolution, organizational and strategic planning, community relations and public education, intergovernmental relations, and personnel health, safety and wellness. (b) Subjects selected to satisfy the continuing education requirement may be selected from Level 1, Level 2, or a combination of both. TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) CHAPTER 451. FIRE OFFICER The Texas Commission on Fire Protection (the commission) proposes amendments to Chapter 451, Fire Officer, concerning 451.7, International Fire Service Accreditation Congress (IFSAC) Seal, and , International Fire Service Accreditation Congress (IFSAC) Seal. The purpose of the proposed amendments is to add an expiration date for current rule language regarding grandfathering for obtaining International Fire Service Accreditation Congress (IF- SAC) Seals. Tim Rutland, Executive Director, has determined that for each year of the first five-year period the proposed amendments are in effect, there will be no fiscal impact on state or local governments. Mr. Rutland has also determined that for each year of the first five years the proposed amendments are in effect, the public benefit from the passage is clear and concise rules regarding requirements for obtaining Fire Officer IFSAC Seals. There will be no effect on micro businesses, small businesses or persons required to comply with the amended section as proposed; therefore, no regulatory flexibility analysis is required. Comments regarding the proposed amendments may be submitted, in writing, within 30 days following the publication of this notice in the Texas Register to Tim Rutland, Executive Director, Texas Commission on Fire Protection, P.O. Box 2286, Austin, Texas or ed to [email protected]. Comments will be reviewed and discussed at a future commission meeting. SUBCHAPTER A. MINIMUM STANDARDS FOR FIRE OFFICER I 37 TAC The amendments are proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties; and , which gives the commission the authority for appointing fire protection personnel. The proposed amendments implement Texas Government Code, Chapter 419, and International Fire Service Accreditation Congress (IFSAC) Seal. (a) Individuals holding a current commission Fire Officer I certification received prior to March 10, 2003, may be granted an International Fire Service Accreditation Congress (IFSAC) seal as a Fire Officer I by making application to the commission for the IFSAC seal and paying applicable fees. This subsection will expire on August 1, (b) Individuals completing a commission [commission-]approved Fire Officer I program, documenting an IFSAC seal for Fire Fighter II and Instructor I, and passing the applicable state examination may be granted an IFSAC seal as a Fire Officer I by making application to the commission for the IFSAC seal and paying applicable fees. 40 TexReg 2404 May 1, 2015 Texas Register

61 TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) SUBCHAPTER B. MINIMUM STANDARDS FOR FIRE OFFICER II 37 TAC The amendments are proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties; and , which gives the commission the authority for appointing fire protection personnel. The proposed amendments implement Texas Government Code, Chapter 419, and International Fire Service Accreditation Congress (IF- SAC) Seal. (a) Individuals holding a current commission [Commission] Fire Officer II certification received prior to March 10, 2003, may be granted an International Fire Service Accreditation Congress (IF- SAC) seal as a Fire Officer II by making application to the commission [Commission] for the IFSAC seal and paying applicable fees. This subsection will expire on August 1, (b) Individuals completing a commission [Commission-]approved Fire Officer II program; documenting IFSAC seals for Fire Fighter II, Instructor I and Fire Officer I; and passing the applicable state examination, may be granted an IFSAC seal as a Fire Officer II by making application to the commission [Commission] for the IFSAC seal and paying applicable fees. TRD Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) CHAPTER 453. HAZARDOUS MATERIALS SUBCHAPTER A. MINIMUM STANDARDS FOR HAZARDOUS MATERIALS TECHNICIAN 37 TAC The Texas Commission on Fire Protection (the commission) proposes an amendment to Chapter 453, Hazardous Materials, concerning 453.7, International Fire Service Accreditation Congress (IFSAC) Seal. The purpose of the proposed amendment is to add an expiration date for current rule language regarding grandfathering for obtaining International Fire Service Accreditation Congress (IF- SAC) Seals. Tim Rutland, Executive Director, has determined that for each year of the first five-year period the proposed amendments are in effect, there will be no fiscal impact on state or local governments. Mr. Rutland has also determined that for each year of the first five years the proposed amendment is in effect, the public benefit from the passage is clear and concise rules regarding requirements for obtaining a Hazardous Materials Technician IFSAC Seal. There will be no effect on micro businesses, small businesses or persons required to comply with the amended section as proposed; therefore, no regulatory flexibility analysis is required. Comments regarding the proposed amendment may be submitted, in writing, within 30 days following the publication of this notice in the Texas Register to Tim Rutland, Executive Director, Texas Commission on Fire Protection, P.O. Box 2286, Austin, Texas or ed to [email protected]. Comments will be reviewed and discussed at a future commission meeting. The amendment is proposed under Texas Government Code, Chapter 419, , which provides the commission the authority to propose rules for the administration of its powers and duties; and , which gives the commission the authority for appointing fire protection personnel. The proposed amendment implements Texas Government Code, Chapter 419, and International Fire Service Accreditation Congress (IFSAC) Seal. (a) Individuals holding a current commission Hazardous Materials Technician certification received prior to March 10, 2003, may be granted an International Fire Service Accreditation Congress (IF- SAC) seal as a Hazardous Materials Technician by making application to the commission for the IFSAC seal and paying applicable fees. This subsection will expire on August 1, (b) Individuals completing a commission approved Hazardous Materials Technician program, documenting an IFSAC seal for Hazardous Materials Awareness Level Personnel; and (1) Hazardous Materials Operations Level Responders, including the Mission-Specific Competencies for Personal Protective Equipment and Product Control under the current edition; or (2) NFPA 472 Hazardous Materials Operations prior to the 2008 edition; and (3) upon passing the applicable state examination, may be granted an IFSAC seal as a Hazardous Materials Technician by making application to the commission for the IFSAC seal and paying applicable fees. TRD PROPOSED RULES May 1, TexReg 2405

62 Tim Rutland Executive Director Texas Commission on Fire Protection For further information, please call: (512) TexReg 2406 May 1, 2015 Texas Register