TITLE 16. ECONOMIC REGULATION

PART 2. PUBLIC UTILITY COMMISSION OF TEXAS

CHAPTER 24. SUBSTANTIVE RULES APPLICABLE TO WATER AND SEWER SERVICE PROVIDERS

SUBCHAPTER B. RATES AND TARIFFS

16 TAC §24.49

The Public Utility Commission of Texas (commission) proposes amendments to 16 Texas Administrative Code (TAC) §24.49 relating to Application for a Rate Adjustment by a Class D Utility Under Texas Water Code §13.1872. Proposed amendments to 16 TAC §24.49 will streamline the process for a Class D water utility to apply for a rate adjustment. It will also provide Class D utilities the benefits of commission's professional resources that will reduce their regulatory compliance burden. The commission also proposes changes to the corresponding Class D utility rate adjustment application form.

Growth Impact Statement

The agency provides the following governmental growth impact statement for the proposed rule, as required by Texas Government Code §2001.0221. The agency has determined that for each year of the first five years that the proposed rule is in effect, the following statements will apply:

(1) the proposed rule will not create a government program and will not eliminate a government program;

(2) implementation of the proposed rule will not require the creation of new employee positions and will not require the elimination of existing employee positions;

(3) implementation of the proposed rule will not require an increase and will not require a decrease in future legislative appropriations to the agency;

(4) the proposed rule will not require an increase and will not require a decrease in fees paid to the agency;

(5) the proposed rule will not, in effect, create a new regulation, because it is replacing a similar regulation;

(6) the proposed rule will repeal an existing regulation, but it will replace that regulation with a similar regulation;

(7) the same number of individuals will be subject to the proposed rule's applicability as were subject to the applicability of the rule it is being proposed to replace; and

(8) the proposed rule will not affect this state's economy.

Fiscal Impact on Small and Micro-Businesses and Rural Communities

There is no adverse economic effect anticipated for small businesses, micro-businesses, or rural communities as a result of implementing the proposed rule. Accordingly, no economic impact statement or regulatory flexibility analysis is required under Texas Government Code §2006.002(c).

Takings Impact Analysis

The commission has determined that the proposed rule will not be a taking of private property as defined in chapter 2007 of the Texas Government Code.

Fiscal Impact on State and Local Government

Anna Givens, director of financial review, has determined that for the first five-year period the proposed rule is in effect, there will be no fiscal implications for the state or for units of local government under Texas Government Code §2001.024(a)(4) as a result of enforcing or administering the section.

Public Benefits

Ms. Givens has determined that for each year of the first five years the proposed section is in effect the public benefit anticipated as a result of enforcing the section is increased efficiency in processing Class D water utilities rate adjustment applications. It will also provide Class D utilities the benefits of commission's professional resources to reduce their regulatory compliance burden and decrease regulatory lag. There will be no adverse economic effect on small businesses or micro-businesses as a result of enforcing this section.

Local Employment Impact Statement

For each year of the first five years the proposed section is in effect, there should be no effect on a local economy; therefore, no local employment impact statement is required under Texas Government Code §2001.022.

Costs to Regulated Persons

Texas Government Code §2001.0045(b) does not apply to this rulemaking because the commission is expressly excluded under subsection §2001.0045(c)(7).

Public Hearing

The commission staff will conduct a public hearing on this rulemaking on November 11th , 2022, at 9:00 a.m. in the Commissioners' Hearing Room, 7th floor, William B. Travis Building if requested in accordance with Texas Government Code §2001.029. The request for a public hearing must be received by November 4, 2022. If no request for public hearing is received and the commission staff cancels the hearing, it will file in this project a notification of the cancellation of the hearing prior to the scheduled date for the hearing.

Public Comments

Interested persons may file comments electronically through the interchange on the commission's website. Comments must be filed by November 4, 2022. Comments should be organized in a manner consistent with the organization of the proposed rules. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed rule. The commission also requests comments on the corresponding Class D utility rate adjustment application form filed under Project No. 54062. The commission will consider the costs and benefits in deciding whether to modify the application form and proposed rules on adoption. All comments should refer to Project No. 54062.

Each set of comments should include a standalone executive summary as the last page of the filing. This executive summary must be clearly labeled with the submitting entity's name and should include a bulleted list covering each substantive recommendation made in the comments.

Statutory Authority

The rule is proposed under TWC §13.041(b), which provides the commission with the authority to adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction, and specifically, TWC §13.181(b), which provides the commission with the authority to fix and regulate rates of utilities; TWC §13.1872, which requires the commission to adopt rules establishing procedures to allow a Class D utility to receive an annual rate adjustment without a hearing; and TWC §13.1873, which requires the commission to adopt rules that allow a Class C or D utility to file a less burdensome application than the applications for a Class A or B utility.

Cross Reference to Statute: Texas Water Code §§13.041, 13.181(b), 13.1872, and 13.1873.

§24.49.Application for a Rate Adjustment by a Class D Utility Under Texas Water Code §13.1872.

(a) Purpose. This section establishes procedures for a Class D utility to apply for an adjustment to its water or wastewater rates as allowed by Texas Water Code (TWC) §13.1872(c)(1).

(b) Definitions. In this section, the term application means an application for a rate adjustment filed under this section and TWC §13.1872(c)(1).

(c) Requirements for filing of the application. Subject to the limitations set out in subsection (g) [(f)] of this section, a Class D utility may file an application with the commission.

(1) The utility may request to increase its tariffed monthly fixed customer or meter charges and monthly gallonage charges by no more than five percent.

(2) The application must be on the commission's form. [and must include:]

[(A) a proposal for the provision of notice that is consistent with subsection (e) of this section; and]

[(B) a copy of the relevant pages of the utility's currently approved tariff showing its current monthly fixed customer or meter charges and monthly gallonage charges.]

(d) Determining whether the application is administratively complete.

(1) If commission staff requires additional information in order to process the application, commission staff must file a notification to the utility within 14 days of the filing of the application requesting any necessary information.

(2) An application may not be deemed administratively complete as required by §24.8 of this title (relating to Administrative Completeness) until after the utility has responded to commission staff's request under paragraph (1) of this subsection.

[(d) Processing of the application. The following criteria apply to the processing of an application.]

[(1) Determining whether the application is administratively complete.]

[(A) If commission staff requires additional information in order to process the application, commission staff must file a notification to the utility within 10 days of the filing of the application requesting any necessary information.]

[(B) An application may not be deemed administratively complete as required by §24.8 of this title (relating to Administrative Completeness) until after the utility has responded to commission staff's request under paragraph (A) of this paragraph.]

[(2) Within 30 days of the filing of the application, commission staff must file a recommendation stating whether the application should be deemed administratively complete as required by §24.8 of this title. If commission staff recommends that the application be deemed administratively complete, commission staff must also file a recommendation on final disposition, including, if necessary, a proposed tariff sheet reflecting the requested rate change.]

(e) Staff recommendation. Within 30 days of the filing of the application, commission staff must file a recommendation stating whether the application should be deemed administratively complete as required by §24.8 of this title. If commission staff recommends that the application be deemed administratively complete, commission staff must also file a recommendation on final disposition, including:

(1) The utility's rate adjustment information as follows:

(A) Certificate of Convenience and Necessity(CCN) number;

(B) Affected subdivision(s);

(C) Existing and proposed base rate by meter size:

(D) Existing and proposed gallonage rate by block;

(E) Percentage increase of the rate adjustment;

(F) Date by which notice is delivered; and

(G) Effective date of the rate increase.

(2) An updated tariff sheet reflecting the requested rate change; and

(3) The proper notice of approved rates to be provided to the utility's ratepayers as described in subsection (f)(2) of this section.

[(e) Notice of Approved Rates. After the utility receives a written order by the commission approving or modifying the utility's application, including the proposed notice of approved rates, and at least 30 days before the effective date of the proposed change established in the commission's order, the utility must send by mail, or by e-mail if the ratepayer has agreed to receive communications electronically, the approved or modified notice to each ratepayer describing the proposed rate adjustment. The notice must include:]

[(1) a statement that the utility requested an annual a rate adjustment and specifying the percent amount requested;]

[(2) the existing rate;]

[(3) the approved rate; and]

[(4) a statement that the rate adjustment was requested under TWC §13.1872 and that a hearing will not be held for the request.]

(f) Notice of Approved Rates.

(1) A utility must send by mail, or by e-mail if the ratepayer has agreed to receive communications electronically, notice to each ratepayer describing the proposed rate adjustment. The notice must be sent after the utility receives a written order from the commission approving the application, and at least 30 days before the effective date of the approved change.

(2) A notice of approved rates must include:

(A) a statement that the utility requested an annual rate adjustment and specifying the percent amount requested;

(B) the existing rate;

(C) the approved rate;

(D) a monthly billing comparison; and

(E) a statement that the rate adjustment was requested under TWC §13.1872 and that a hearing will not be held for the request.

[(f) Time between filings. The following criteria apply to the timing of the filing of an application.]

[(1) A Class D utility may adjust its rates under this section not more than once each calendar year and not more than four times between rate proceedings filed under TWC §13.1872(c)(2).]

[(2) The filing of applications as allowed by this section is limited to a specific quarter of the calendar year, and is based on the last two digits of a utility's certificate of convenience and necessity (CCN) number as outlined below, unless good cause is shown for filing in a different quarter. For a utility holding multiple CCNs, the utility may file an application in any quarter for which any of its CCN numbers is eligible.]

[(A) Quarter 1 (January-March): CCNs ending in 00 through 27;]

[(B) Quarter 2 (April-June): CCNs ending in 28 through 54;]

[(C) Quarter 3 (July-September): CCNs ending in 55 through 81; and]

[(D) Quarter 4 (October-December): CCNs ending in 82 through 99.]

(g) Time between filings. A Class D utility may adjust its rates under this section not more than once each calendar year and not more than four times between rate proceedings filed under TWC §13.1872(c)(2).

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 29, 2022.

TRD-202203927

Andrea Gonzalez

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 936-7244


SUBCHAPTER H. CERTIFICATES OF CONVENIENCE AND NECESSITY

16 TAC §24.239

The Public Utility Commission of Texas (commission) proposes amendments to 16 Texas Administrative Code (TAC) §24.239, relating to Sale, Transfer, Merger, Consolidation, Acquisition, Lease, or Rental. This proposed rule will implement Texas Water Code (TWC) §13.301 and Tex. Gov't Code §1502.055 as revised by House Bill 3717 during the Texas 87th Regular Legislative Session. The amended rule will clarify the entities to which the rule applies and implement specific requirements for transactions involving the purchase of a municipally owned utility.

Growth Impact Statement

The agency provides the following governmental growth impact statement for the proposed rule, as required by Tex. Gov't Code §2001.0221. The agency has determined that for each year of the first five years that the proposed rule is in effect, the following statements will apply:

(1) the proposed rule will not create a government program and will not eliminate a government program;

(2) implementation of the proposed rule will not require the creation of new employee positions and will not require the elimination of existing employee positions;

(3) implementation of the proposed rule will not require an increase and will not require a decrease in future legislative appropriations to the agency;

(4) the proposed rule will not require an increase and will not require a decrease in fees paid to the agency;

(5) the proposed rule will not create a new regulation;

(6) the proposed rule will not expand, limit, or repeal an existing regulation;

(7) the proposed rule will not change the number of individuals subject to the rule's applicability; and

(8) the proposed rule will not affect this state's economy.

Fiscal Impact on Small and Micro-Businesses and Rural Communities

There is no adverse economic effect anticipated for small businesses, micro-businesses, or rural communities as a result of implementing the proposed rule. Accordingly, no economic impact statement or regulatory flexibility analysis is required under Tex. Gov't Code §2006.002(c).

Takings Impact Analysis

The commission has determined that the proposed rule will not be a taking of private property as defined in Tex. Gov't Code Chapter 2007.

Fiscal Impact on State and Local Government

Tammy Benter, Division Director, Utility Outreach, has determined that for the first five-year period the proposed rule is in effect, there will be no fiscal implications for the state or for units of local government under Tex. Gov't Code §2001.024(a)(4) as a result of enforcing or administering the section.

Public Benefits

Ms. Benter has determined that for each year of the first five years the proposed section is in effect the public benefits anticipated as a result of enforcing the section will be enhanced clarity to the applicability of the rule, guidance to entities involved in transactions to purchase a municipally owned utility, and expedited approval of the sale of municipally owned utilities. There will be no probable economic cost to persons required to comply with the rule under Tex. Gov't Code §2001.024(a)(5).

Local Employment Impact Statement

For each year of the first five years the proposed section is in effect, there should be no effect on a local economy; therefore, no local employment impact statement is required under Tex. Gov't Code §2001.022.

Costs to Regulated Persons

Tex. Gov't Code §2001.0045(b) does not apply to this rulemaking because the commission is expressly excluded under §2001.0045(c)(7).

Public Hearing

The commission staff will conduct a public hearing on this rulemaking if requested in accordance with Tex. Gov't Code §2001.029. The request for a public hearing must be received by November 4, 2022. If a request for public hearing is received, commission staff will file in this project a notice of hearing.

Public Comments

Interested persons may file comments electronically through the interchange on the commission's website. Comments must be filed by November 4, 2022. Comments should be organized in a manner consistent with the organization of the proposed rule. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed rule. The commission will consider the costs and benefits in deciding whether to modify the proposed rule on adoption. All comments should refer to Project Number 54046.

Each set of comments should include a standalone executive summary as the last page of the filing. This executive summary must be clearly labeled with the submitting entity's name and should include a bulleted list covering each substantive recommendation made in the comments.

Statutory Authority

The amendment is proposed under TWC §13.041(b), which provides the commission with the authority to adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction. The amendment is also proposed under TWC §13.301, which governs the sale, acquisition, lease, or rental of water and sewer utilities by entities required to possess a certificate of public convenience and necessity; and Tex. Gov't Code §1502.055, which requires the sale of a utility system to be authorized by a majority vote of the qualified voters of the municipality unless certain circumstances apply.

Cross Reference to Statute: Public Utility Regulatory Act §14.002; TWC §13.301; Tex. Gov't Code §1502.055.

§24.239.Sale, Transfer, Merger, Consolidation, Acquisition, Lease, or Rental.

(a) Application [for approval of transaction]. Any water supply or sewer service corporation or a water and sewer utility owned by an entity required to possess a certificate of convenience and necessity (CCN) must comply with this section. A municipality, district, or political subdivision may, but is not required to, comply with this section[, and a retail public utility that possesses a CCN may, file a written application with the commission and give public notice of any sale, transfer, merger, consolidation, acquisition, lease, or rental at least 120 days before the effective date of the transaction. The 120-day period begins on the most recent of:]

[(1) the last date the applicant mailed the required notice as stated in the applicant's affidavit of notice; or]

[(2) the last date of the publication of the notice in the newspaper as stated in the affidavit of publication, if required.]

(b) Filing requirements for approval of transaction and public notice. No later than 120 days before the effective date of any sale, transfer, merger, consolidation, acquisition, lease, or rental, a written application must be filed with the commission and public notice of the transaction must be given. Notice is considered given under this subsection on the later of:

(1) the last date the applicant mailed the required notice as stated in the applicant's affidavit of notice; or

(2) the last date of the publication of the notice in the newspaper as stated in the affidavit of publication, if required.

(c) Transaction involving a municipally owned utility. A transaction involving the purchase of a municipally owned utility must comply with this subsection.

(1) A water supply or sewer service corporation or a water and sewer utility owned by an entity required to possess a CCN applying to purchase a municipally owned utility must provide documentation indicating either:

(A) the sale has been authorized by a majority vote of the qualified voters of the municipality in an election held by the governing body of the municipality and in the manner provided for bond elections in the municipality; or

(B) the Texas Commission on Environmental Quality (TCEQ) has issued a notice of violation to the municipally owned utility and the governing body of the municipality finds by official action during an open meeting under Tex. Gov't Code Subchapter 551 that the municipality is either financially or technically unable to restore the municipally owned utility to compliance with the applicable law or regulations.

(2) For a sale authorized as described by paragraph (1)(A) of this subsection, the applicant must provide a copy of the record of proceedings authorizing the sale of the municipally owned utility that comply with Tex. Gov't Code Subchapter 1251; and

(3) For a sale authorized as described by paragraph (1)(B) of this subsection, the applicant must provide notice to the TCEQ of the transaction by certified mail and the following information to the commission:

(A) a copy of the active notice of violation from the TCEQ involving the municipally owned utility;

(B) a copy of the certified mail receipt for the notice issued to the TCEQ regarding the transaction; and

(C) a copy of the official action taken by the governing body of the municipality at an open meeting under Tex. Gov't Code Subchapter 551 finding the municipality is financially or technically unable to restore the municipally owned utility to compliance with the applicable law or regulations.

(d) [(b)] Intervention period. The intervention period for an application filed under this section must not be less than 30 days. The presiding officer may order a shorter intervention period for good cause shown.

(e) [(c)] Notice to affected parties.

(1) Unless notice is waived by the commission, proper notice must be given to affected customers and to other affected parties as required by the commission on the form prescribed by the commission. The notice must include the following:

(A) the name and business address of the utility currently holding the CCN (transferor) and the retail public utility or person that will acquire the facilities or CCN (transferee);

(B) a description of the requested area;

(C) the following statement: "Persons who wish to intervene in the proceeding or comment upon the action sought should contact the Public Utility Commission, P.O. Box 13326, Austin, Texas 78711-3326, or call the Public Utility Commission at (512) 936-7120 or (888) 782-8477. Hearing- and speech-impaired individuals with text telephones (TTY) may contact the commission at (512) 936-7136. The deadline for intervention in the proceeding is (date 30 days from the mailing or publication of notice, whichever occurs later, unless otherwise provided by the presiding officer). If you wish to intervene, the commission must receive your letter requesting intervention or motion to intervene by that date."; and

(D) if the transferor is a nonfunctioning utility with a temporary rate in effect and the transferee is requesting that the temporary rate remain in effect under TWC §13.046(d), the following information:

(i) the temporary rates currently in effect for the nonfunctioning utility; and

(ii) the duration of time for which the transferee is requesting that the temporary rates remain in effect.

(E) if the transferor is a municipality, the notice must also provide a copy, or a description of where a copy can be accessed electronically, of the following information, as applicable:

(i) the record of proceedings order if subsection (c)(1)(A) of this section applies; or

(ii) the active notice of violation issued by the TCEQ and the official action taken by the governing body of the municipality at an open meeting under Tex. Gov't Code Subchapter 551 relating to financial or technical insufficiency if subsection (c)(1)(B) of this section applies.

(2) The transferee must mail the notice to cities and neighboring retail public utilities providing the same utility service whose corporate limits or certificated service area boundaries are within two miles from the outer boundary of the requested area, and any city with an extraterritorial jurisdiction that overlaps the requested area.

(3) The commission may require the transferee to publish notice once each week for two consecutive weeks in a newspaper of general circulation in each county in which the retail public utility being transferred is located. The commission may allow published notice in lieu of individual notice as required by paragraph (2) of this subsection.

(4) The commission may waive published notice if the requested area does not include unserved area, or for good cause shown.

(f) [(d)] Requirements for application with fair market valuation.

(1) An application filed under this section for approval of a transaction that includes a fair market valuation of the transferee or the transferee's facilities that was determined using the process established in §24.238 of this title, relating to Fair Market Valuation must include:

(A) copies of the three appraisals performed under §24.238(f);

(B) the purchase price agreed to by the transferor and transferee;

(C) the transaction and closing costs incurred by the transferee that will be requested to be included in the transferee's rate base; and

(D) if applicable, a copy of the transferor's commission-approved tariff that contains the rates in effect at the time of the acquisition.

(2) The commission will review the transaction and closing costs, including fees paid to appraisers, in the rate case in which the transferee requests rate recovery of those costs.

(g) [(e)] A retail public utility or person that files an application under this section to purchase, transfer, merge, acquire, lease, rent, or consolidate a utility or system must demonstrate adequate financial, managerial, and technical capability for providing continuous and adequate service to the requested area and the transferee's certificated service area as required by §24.227(a) of this title, relating to Criteria for Granting or Amending a Certificate of Convenience and Necessity.

(h) [(f)] If the transferee cannot demonstrate adequate financial capability, the commission may require that the transferee provide financial assurance to ensure continuous and adequate retail water or sewer utility service is provided to both the requested area and any area already being served under the transferee's existing CCN. The commission will set the amount of financial assurance. The form of the financial assurance must meet the requirements of §24.11 of this title, relating to Financial Assurance. The obligation to obtain financial assurance under this title does not relieve an applicant from any requirements to obtain financial assurance to satisfy another state agency's rules.

(i) [(g)] The commission will, with or without a public hearing, investigate the sale, transfer, merger, consolidation, acquisition, lease, or rental to determine whether the transaction will serve the public interest. If the commission decides to hold a hearing, or if the transferee fails either to file the application as required or to provide public notice, the transaction proposed in the application may not be completed unless the commission determines that the proposed transaction serves the public interest.

(j) [(h)] Before the expiration of the 120-day period described in subsection (b) [(a)] of this section, the commission will determine whether to require a public hearing to determine if the transaction will serve the public interest. The commission will notify the transferee, the transferor, all intervenors, and the Office of Public Utility Counsel whether a hearing will be held. The commission may require a hearing if:

(1) the application filed with the commission or the public notice was improper;

(2) the transferee has not demonstrated adequate financial, managerial, and technical capability for providing continuous and adequate service to the requested area and any area already being served under the transferee's existing CCN;

(3) the transferee has a history of:

(A) noncompliance with the requirements of the Texas Commission on Environmental Quality (TCEQ), the commission, or the Texas Department of State Health Services; or

(B) continuing mismanagement or misuse of revenues as a utility service provider;

(4) the transferee cannot demonstrate the financial ability to provide the necessary capital investment to ensure the provision of continuous and adequate service to the requested area; or

(5) there are concerns that the transaction does not serve the public interest based on consideration of the following factors:

(A) the adequacy of service currently provided to the requested area;

(B) the need for additional service in the requested area;

(C) the effect of approving the transaction on the transferee, the transferor, and any retail public utility of the same kind already serving the area within two miles of the boundary of the requested area;

(D) the ability of the transferee to provide adequate service;

(E) the feasibility of obtaining service from an adjacent retail public utility;

(F) the financial stability of the transferee, including, if applicable, the adequacy of the debt-equity ratio of the transferee if the transaction is approved;

(G) environmental integrity;

(H) the probable improvement of service or lowering of cost to consumers in the requested area resulting from approving the transaction; and

(I) whether the transferor or the transferee has failed to comply with any commission or TCEQ order. The commission may refuse to approve a sale, transfer, merger, consolidation, acquisition, lease, or rental if conditions of a judicial decree, compliance agreement, or other enforcement order have not been substantially met.

(k) [(i)] If the commission does not require a public hearing, the sale, transfer, merger, consolidation, acquisition, lease, or rental may be completed as proposed:

(1) at the end of the 120-day period described in subsection (b) [(a)] of this section; or

(2) at any time after the transferee receives notice from the commission that a hearing will not be required.

(l) [(j)] Within 30 days of the commission order that approves the sale, transfer, merger, consolidation, acquisition, lease, or rental to proceed as proposed, the transferee must provide a written update on the status of the transaction, and every 30 days thereafter, until the transaction is complete. The transferee must inform the commission of any material changes in its financial, managerial, and technical capability to provide continuous and adequate service to the requested area and the transferee's service area.

(m) [(k)] If there are outstanding customer deposits, within 30 days of the actual effective date of the transaction, the transferor and the transferee must file with the commission, the following information supported by a notarized affidavit:

(1) the names and addresses of all customers who have a deposit on record with the transferor;

(2) the date such deposit was made;

(3) the amount of the deposit; and

(4) the unpaid interest on the deposit. All such deposits must be refunded to the customer or transferred to the transferee, along with all accrued interest.

(n) [(l)] Within 30 days after the actual effective date of the transaction, the transferee and the transferor must file a signed contract, bill of sale, or other appropriate documents as evidence that the transaction has closed as proposed. The signed contract, bill of sale, or other documents, must be signed by both the transferor and the transferee. If there were outstanding customer deposits, the transferor and the transferee must also file documentation that customer deposits have been transferred or refunded to the customers with interest as required by this section.

(o) [(m)] The commission's approval of a sale, transfer, merger, consolidation, acquisition, lease, or rental of any water or sewer system or retail public utility expires 180 days following the date of the commission order allowing the transaction to proceed. If the sale has not been completed within that 180-day time period, the approval is void, unless the commission in writing extends the time period.

(p) [(n)] If the commission does not require a hearing, and the transaction is completed as proposed, the commission may issue an order approving the transaction.

(q) [(o)] A sale, transfer, merger, consolidation, acquisition, lease, or rental of any water or sewer system or retail public utility required by law to possess a CCN, or transfer of customers or service area, owned by an entity required by law to possess a CCN that is not completed in accordance with the provisions of TWC §13.301 is void.

(r) [(p)] The requirements of TWC §13.301 do not apply to:

(1) the purchase of replacement property;

(2) a transaction under TWC §13.255; or

(3) foreclosure on the physical assets of a utility.

(s) [(q)] If a utility's facility or system is sold and the utility's facility or system was partially or wholly constructed with customer contributions in aid of construction derived from specific surcharges approved by the regulatory authority over and above revenues required for normal operating expenses and return, the utility may not sell or transfer any of its assets, its CCN, or a controlling interest in an incorporated utility, unless the utility provides a written disclosure relating to the contributions to both the transferee and the commission before the date of the sale or transfer. The disclosure must contain, at a minimum, the total dollar amount of the contributions and a statement that the contributed property or capital may not be included in invested capital or allowed depreciation expense by the regulatory authority in rate-making proceedings. This subsection does not apply to a utility facility or system sold as part of a transaction where the transferor and transferee elected to use the fair market valuation process set forth in §24.238 of this title, relating to Fair Market Valuation.

(t) [(r)] For any transaction subject to this section, the retail public utility that proposes to sell, transfer, merge, acquire, lease, rent, or consolidate its facilities, customers, service area, or controlling interest must provide the other party to the transaction a copy of this section before signing an agreement to sell, transfer, merge, acquire, lease, rent, or consolidate its facilities, customers, service area, or controlling interest.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 29, 2022.

TRD-202203921

Adriana Gonzales

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 936-7322


CHAPTER 25. SUBSTANTIVE RULES APPLICABLE TO ELECTRIC SERVICE PROVIDERS

The Public Utility Commission of Texas (commission) proposes: amendments to 16 TAC §25.30, relating to Complaints; the repeal of existing §25.105, relating to Registration and Reporting by Power Marketers, §25.107, relating to Certification of Retail Electric Providers (REPs) and §25.109, relating to Registration of Power Generation Companies and Self-Generators; new §25.105, relating to Registration by Power Marketers; new §25.107, relating to Certification and Obligations of Retail Electric Providers (REPs); and new §25.109, relating to Registration by Power Generation Companies and Self-Generators; amendments to §25.485, relating to Customer Access and Complaint Handling, and §25.495, relating to Unauthorized Change of Retail Electric Provider. The commission also amends the certification and registration forms and other documents associated with §§25.105, 25.107, and 25.109.

The proposed rules amend §§25.30, 25.485, and 25.495 to change the time period for entities to respond to complaints from 21 days to 15 days. The proposed rules ensure the commission has current information on power marketers and power generation companies (PGCs), disallow certain persons from controlling REPs and PGCs, and strengthen the financial requirements for REPs.

Growth Impact Statement

The agency provides the following governmental growth impact statement for the proposed rules, as required by Tex. Gov't Code §2001.0221. The agency has determined that for each year of the first five years that the proposed rules are in effect, the following statements will apply:

(1) the proposed rules will not create a government program and will not eliminate a government program;

(2) implementation of the proposed rules will not require the creation of new employee positions and will not require the elimination of existing employee positions;

(3) implementation of the proposed rules will not require an increase and will not require a decrease in future legislative appropriations to the agency;

(4) the proposed rules will not require an increase and will not require a decrease in fees paid to the agency;

Fiscal Impact on Small and Micro-Businesses and Rural Communities

There is no adverse economic effect anticipated for small businesses, micro-businesses, or rural communities as a result of implementing the proposed rules. Accordingly, no economic impact statement or regulatory flexibility analysis is required under Tex. Gov't Code §2006.002(c).

Takings Impact Analysis

The commission has determined that the proposed rules will not be a taking of private property as defined in Tex. Gov't Code. chapter 2007.

Fiscal Impact on State and Local Government

Mariah Benson, Economist, Market Analysis, has determined that for the first five-year period the proposed rules are in effect, there will be no fiscal implications for the state or for units of local government under Tex. Gov't Code §2001.024(a)(4) as a result of enforcing or administering the sections.

Public Benefits

Ms. Benson has determined that for each year of the first five years the proposed sections are in effect the public benefit anticipated as a result of enforcing the section will be a reduction of risk to the market by enhancing the application processes for, and refining the obligations of, market participants. There will be no adverse economic effect on small businesses or micro-businesses as a result of enforcing these sections.

Local Employment Impact Statement

For each year of the first five years the proposed sections are in effect, there should be no effect on a local economy; therefore, no local employment impact statement is required under Tex. Gov't Code §2001.022.

Costs to Regulated Persons

Tex. Gov't Code §2001.0045(b) does not apply to this rulemaking because the commission is expressly excluded under §2001.0045(c)(7).

Public Hearing

The commission staff will conduct a public hearing on this rulemaking if requested in accordance with Tex. Gov't Code §2001.029. The request for a public hearing must be received by December 1, 2022. If a request for public hearing is received, commission staff will file in this project a notice of hearing.

Public Comments

Interested persons may file comments electronically through the interchange on the commission's website. Comments must be filed by November 14, 2022. Reply comments must be filed by December 1, 2022. Comments should be organized in a manner consistent with the organization of the proposed rules. The commission invites specific comments regarding the costs associated with, and benefits that will be gained by, implementation of the proposed rules. The commission will consider the costs and benefits in deciding whether to modify the proposed rules on adoption. All comments should refer to Project Number 52796.

Each set of comments should include a standalone executive summary as the last page of the filing. This executive summary must be clearly labeled with the submitting entity's name and should include a bulleted list covering each substantive recommendation made in the comments.

SUBCHAPTER B. CUSTOMER SERVICE AND PROTECTION

16 TAC §25.30

Statutory Authority

The amended rules are proposed under PURA §14.002, which provides the commission with the authority to make adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction. PURA §15.051 which concerns customer complaints for acts or omissions by a public utility in violation or claimed violation of a law for which the commission has jurisdiction. PURA §17.001, §17.003, and §17.004 which collectively authorize the commission to impose customer protection standards in the electric market. PURA §39.351, which stipulates the requirements to register with the commission as a power generation company. PURA §39.352, which stipulates the requirements to certify with the commission as a REP. PURA §39.356 which authorizes the commission to suspend, revoke, or amend a REP certification for significant violations of PURA and PURA §39.357 which authorizes the commission to impose administrative penalties for significant violations of PURA by REPs. PURA §35.032 and §39.355, which require registration with the commission prior to serving as a power marketer.

Cross Reference to Statute: Public Utility Regulatory Act §§14.002, 15.051, 17.001, 17.003, 17.004, 35.032, 39.351, 39.352, 39.355, 39.356, and 39.357.

§25.30.Complaints.

(a) Complaints to the electric utility. A customer or applicant may file a complaint in person, by letter, by email, by electronic form, or by telephone with the electric utility. The electric utility must [shall] promptly investigate and advise the complainant of the results within 15 [21] days. The customer or applicant has the right to request from the electric utility a supervisory review of their complaint if they are not satisfied with the results of the electric utility's initial response to their complaint.

(1) If the electric utility is unable to provide a supervisory review immediately following the customer's request, then arrangements for the review must be made for the earliest possible date.

(2) Service must not be disconnected before completion of the review. If the customer chooses not to participate in a review then the company may disconnect service, providing proper notice has been issued under the disconnect procedures in §25.29 of this title (relating to Disconnection of Service).

(3) The results of the supervisory review must be provided in writing to the customer within ten days of the review, if requested.

(4) Customers who are dissatisfied with the electric utility's supervisory review must be informed of their right to file a complaint with the commission.

[(b) Supervisory review by the electric utility. Any electric utility customer or applicant has the right to request a supervisory review if they are not satisfied with the electric utility's response to their complaint.]

[(1) If the electric utility is unable to provide a supervisory review immediately following the customer's request, then arrangements for the review shall be made for the earliest possible date.]

[(2) Service shall not be disconnected before completion of the review. If the customer chooses not to participate in a review then the company may disconnect service, providing proper notice has been issued under the disconnect procedures in §25.29 of this title (relating to Disconnection of Service).]

[(3) The results of the supervisory review must be provided in writing to the customer within ten days of the review, if requested.]

[(4) Customers who are dissatisfied with the electric utility's supervisory review must be informed of their right to file a complaint with the commission.]

(b) [(c)] Complaints to the commission.

(1) If the complainant is dissatisfied with the results of the electric utility's complaint investigation or supervisory review, the electric utility must advise the complainant of the commission's informal complaint resolution process. The electric utility must also provide the customer the following contact information for the commission: Public Utility Commission of Texas, Office of Customer Protection, P.O. Box 13326, Austin, Texas 78711-3326, (512)936-7120 or in Texas (toll-free) 1-888-782-8477, fax (512)936-7003, e-mail address: customer@puc.texas.gov [customer@puc.state.tx.us], internet address: www.puc.texas.gov [www.puc.state.tx.us], TTY (512)936-7136, and Relay Texas (toll-free) 1-800-735-2989.

(2) The electric utility must [shall] investigate all complaints and advise the commission in writing of the results of the investigation within 15 [21] days after the complaint is forwarded to the electric utility.

(3) The electric utility must [shall] keep a record for two years after determination by the commission of all complaints forwarded to it by the commission. This record must [shall] show the name and address of the complainant, the date, nature and adjustment or disposition of the complaint. Protests regarding commission-approved rates or charges which require no further action by the electric utility need not be recorded.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 29, 2022.

TRD-202203922

Adriana Gonzales

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 936-7322


SUBCHAPTER E. CERTIFICATION, LICENSING AND REGISTRATION

16 TAC §§25.105, 25.107, 25.109

Statutory Authority

The repeals are proposed under PURA §14.002, which provides the commission with the authority to make adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction. PURA §15.051 which concerns customer complaints for acts or omissions by a public utility in violation or claimed violation of a law for which the commission has jurisdiction. PURA §§17.001, 17.003, and 17.004 which collectively authorize the commission to impose customer protection standards in the electric market. PURA §39.351, which stipulates the requirements to register with the commission as a power generation company. PURA §39.352, which stipulates the requirements to certify with the commission as a REP. PURA §39.356 which authorizes the commission to suspend, revoke, or amend a REP certification for significant violations of PURA and PURA §39.357 which authorizes the commission to impose administrative penalties for significant violations of PURA by REPs. PURA §35.032 and §39.355, which require registration with the commission prior to serving as a power marketer.

Cross Reference to Statute: Public Utility Regulatory Act §§14.002, 15.051, 17.001, 17.003, 17.004, 35.032, 39.351, 39.352, 39.355, 39.356, and 39.357.

§25.105.Registration and Reporting by Power Marketers.

§25.107.Certification of Retail Electric Providers (REPs).

§25.109.Registration of Power Generation Companies and Self-Generators.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 29, 2022.

TRD-202203925

Adriana Gonzales

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 936-7322


16 TAC §§25.105, 25.107, 25.109

Statutory Authority

The new rules are proposed under PURA §14.002, which provides the commission with the authority to make adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction. PURA §15.051 which concerns customer complaints for acts or omissions by a public utility in violation or claimed violation of a law for which the commission has jurisdiction. PURA §17.001, §17.003, and §17.004 which collectively authorize the commission to impose customer protection standards in the electric market. PURA §39.351, which stipulates the requirements to register with the commission as a power generation company. PURA §39.352, which stipulates the requirements to certify with the commission as a REP. PURA §39.356 which authorizes the commission to suspend, revoke, or amend a REP certification for significant violations of PURA and PURA §39.357 which authorizes the commission to impose administrative penalties for significant violations of PURA by REPs. PURA §35.032 and §39.355, which require registration with the commission prior to serving as a power marketer.

Cross Reference to Statute: Public Utility Regulatory Act §§14.002, 15.051, 17.001, 17.003, 17.004, 35.032, 39.351, 39.352, 39.355, 39.356, and 39.357.

§25.105.Registration by Power Marketers.

(a) Applicability. This section contains the registration and renewal of registration requirements for a power marketer. A person must be registered as a power marketer with the commission to participate in the Texas wholesale market as a power marketer. The registration of a person already registered as a power marketer as of the effective date of this section expires on June 1, 2023, unless the person files a new registration in compliance with the requirements of this section.

(b) Registration information. To register as a power marketer, a person must submit the following information in the manner established by the commission.

(1) The registrant's contact information, including the registrant's:

(A) physical and business mailing address;

(B) business telephone number; and

(C) business e-mail address.

(2) The name of the current regulatory contact, and the contact's e-mail address and telephone number.

(3) The addresses of any facilities used by the registrant in Texas.

(4) A description of the activities the registrant will participate in, and services provided.

(5) As applicable, copies of all information filed with the Federal Energy Regulatory Commission (FERC) relating to the registrant's FERC registration to sell electric energy at market-based rates.

(6) An affidavit signed by a representative, official, officer, or other authorized person with binding authority over the registrant affirming that the registrant qualifies as a power marketer. The affidavit must also include the following information:

(A) the business name of any affiliated entity registered with the commission and the type of commission registration associated with each affiliated entity;

(B) whether each affiliate buys or sells electricity at wholesale in Texas; sells electricity at retail in Texas; or is an electric cooperative or municipally owned utility in Texas; and

(C) the business name of any affiliated qualified scheduling entity.

(c) Update of registration. A power marketer must update, in a manner established by the commission, its registration within 30 days of a change to information listed under subsection (b) of this section.

(d) Renewal of registration. A power marketer must renew its registration on or before November 1 of each calendar year by submitting, in a manner established by the commission, the information required by subsection (b) of this section or by submitting a statement that the power marketer's registration information on file with the commission is current.

(1) Commission staff will send one notice to the regulatory contact listed for a power marketer that has not submitted its registration renewal by November 1st. Commission staff's failure to send this notice does not excuse a power marketer from complying with any of the requirements of this section.

(2) A power marketer registration that is not renewed by December 31st of each calendar year expires.

(3) Commission staff will notify the Electric Reliability Council of Texas of a power marketer whose registration has expired.

(4) A person may not continue to operate as a power marketer in Texas after its registration has expired.

(5) A person whose power marketer registration is expired may apply for a new registration at any time.

(e) Commission list of power marketers. The commission will maintain a list of power marketers registered in Texas on the commission's website. A power marketer that fails to renew its registration under subsection (d) of this section may be listed as "Expired" on the commission's list of power marketers.

§25.107.Certification and Obligations of Retail Electric Providers (REPs).

(a) Applicability.

(1) This section contains the certification and reporting requirements applicable to a retail electric provider (REP).

(A) A person must obtain a REP certificate under this section before purchasing, taking title to, or reselling electricity to provide retail electric service. Certification must be maintained on an ongoing basis by timely reporting and updating the certification information as required by this section.

(B) A person that does not purchase, take title to, or resell electricity to provide electric service to a retail customer is not a REP and must not act as a REP without obtaining a certificate under this section. A REP that outsources retail electric service functions is responsible for those functions in accordance with all applicable laws and commission rules for all activities conducted on its behalf by any third-party provider.

(C) A person operating an electric-vehicle charging station is not, for that reason, required to be certified as a REP.

(2) This section also applies, where specifically stated, to an independent system operator or transmission and distribution utility (TDU).

(3) A person already certified as an Option 1 REP as of the effective date of this section must come into compliance with the requirements of this section by August 15, 2023.

(A) A REP must complete and file a commission approved compliance update form that demonstrates the REP is in compliance with this section on or before August 15, 2023.

(B) A REP who does not demonstrate compliance with this section on or before August 15, 2023 may be subject to a suspension of acquiring new customers under subsection (l) of this section.

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

(1) Affiliate--As defined in §25.5 of this title (relating to Definitions).

(2) Assumed name--has the meaning assigned in Chapter 71 of the Texas Business and Commerce Code.

(3) Continuous and reliable electric service--Retail electric service provided by a REP that is consistent with the customer's terms and conditions of service and uninterrupted by the unlawful or unjustified action or inaction of the REP.

(4) Control--The term control (including the terms controlling, controlled by and under common control with) means the direct or indirect possession of binding authority to direct or cause the direction of the management, policies, operations, or decision-making of a person, whether through ownership of voting securities, by contract, formation documents, or otherwise. A principal is a controlling person. A third-party provider may be a controlling person.

(5) Default--As defined in a TDU tariff for retail delivery service, Electric Reliability Council of Texas (ERCOT) qualified scheduling entity (QSE) agreement, or ERCOT load serving entity (LSE) agreement, ERCOT standard form market participant agreement (SFA), or any similar agreement with an applicable independent organization other than ERCOT.

(6) Executive officer--An entity's president, any vice president in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function, or any other person who performs similar policy making functions. Executive officers of subsidiaries may be deemed executive officers of the entity if they perform such policy making functions for the entity.

(7) Guarantor--A person that provides an irrevocable guaranty agreement using the standard form approved by the commission under this section.

(8) Investment-grade credit rating--A long-term unsecured credit rating issued by the bond credit rating companies Moody's Investors' Service (Moody's), Standard & Poor (S&P), or Fitch of at least "Baa3" from Moody's or "BBB-" from S&P or Fitch.

(9) Option 1 REP--A REP that provides its service offerings to any customer class based on geographic service area.

(10) Option 2 REP--A REP that limits its service offerings to specifically identified customers, each of whom contracts for one megawatt or more of capacity.

(11) Option 3 REP--A REP that sells electricity exclusively to a retail customer, other than a small commercial or residential customer, from a distributed generation facility owned by a power generation company (PGC) that has registered in accordance with §25.109 of this title (relating to Registration of Power Generation Companies and Self-Generators) located on the same geographic site as the customer.

(12) Person--An individual or any business entity, including and without limitation, a limited liability company, a partnership of two or more persons having a joint or common interest, a mutual or cooperative association, or a corporation. Person does not include an electric cooperative or a municipal corporation.

(13) Principal--Includes:

(A) A sole proprietor;

(B) A general partner;

(C) An executive of a company (e.g., a president, chief executive officer, chief operating officer, chief financial officer, general counsel, or equivalent position);

(D) A manager, managing member, or a member vested with the management authority of a limited liability company or limited liability partnership;

(E) A shareholder with more than 10% equity of the REP, if a public company; or

(F) A person who has apparent or actual authority to exercise control over the REP or exercises control over a principal otherwise described by this subsection. A consultant or third-party provider can be a principal to the extent they exercise control over the REP or its principals.

(14) Shareholder--The legal or beneficial owner of any of the equity of any business entity as the context and applicable business entity requires, including, stockholders of corporations, members of limited liability companies and equity partners of partnerships.

(15) Tangible net worth--Total shareholders' equity, determined in accordance with generally accepted accounting principles, less intangible assets other than goodwill.

(16) Third-party provider--An entity to which a REP outsources or plans to outsource any retail or wholesale electric functions, including a contractor, consultant, agent, or any other person not directly employed by the REP. A third-party provider can be a principal to the extent it exercises control over the REP or its principals.

(c) Application processing.

(1) A person can apply for REP certification by submitting a complete application on a form approved by the commission. Commission staff will review each application for sufficiency and submit a recommendation to the presiding officer within 20 days after the application is filed. The presiding officer will make a determination of sufficiency of the application within ten days of receipt of commission staff's recommendation. If the presiding officer finds that the application is deficient, the presiding officer must notify the applicant. The applicant will have ten days from the issuance of the notice to cure the deficiencies. If the deficiencies are not cured within ten days, the presiding officer may notify the applicant that the certification request is rejected without prejudice.

(2) While an application for certification or amendment is pending, an applicant must notify the commission of any material change to the information provided in the application within ten days of any such change.

(3) Except where good cause exists to extend the time for review, the presiding officer will issue an order approving, rejecting, or approving with modifications, an application within 90 days of finding an application sufficient.

(4) For applications to certify as an Option 1 REP, the presiding officer will deny an application if the configuration of the proposed geographic area would unduly discriminate in the provision of electric service to any customer because of race, creed, color, national origin, ancestry, sex, marital status, lawful source of income, disability, or familial status; because the customer is located in an economically distressed geographic area or qualifies for low income affordability or energy efficiency services; or because of any other reason prohibited by law.

(5) For applications to certify as an Option 2 REP, if the REP does not file an affidavit from a customer with which it has contracted to provide one megawatt or more of energy by the 30th day of the application being approved, then the presiding officer will administratively revoke the REP certificate without prejudice. The person can file a new application for certification at any time.

(d) Basic requirements.

(1) A REP must maintain its certification by complying with the following subparagraphs.

(A) Only provide retail electric service under the name or names set forth in an approved application for certification or subsequent amendment application. A REP's certificate must contain the REP's legal business name and all assumed names under which it proposes to provide service.

(B) Not use more than five assumed names in the REP's regular course of business.

(C) Maintain an active business registration with the Texas Secretary of State.

(D) Maintain current and accurate contact information including:

(i) physical and business mailing address;

(ii) business telephone number;

(iii) business e-mail address;

(iv) regulatory contact name, telephone number, and e-mail address; and

(v) customer complaint contact name, telephone number, and e-mail address;

(vi) emergency contact's name, telephone number, and e-mail address; and

(vii) primary contact's name, telephone number, and e-mail address.

(E) Maintain current and accurate office information including:

(i) an office open during normal business hours with a street address located within Texas for the purpose of providing customer service and making available to commission staff books and records sufficient to establish the REP's compliance with Public Utility Regulatory Act (PURA) and commission rules; the office must have a business telephone number, business e-mail address, and business postal address where the REP's staff can be directly reached; and

(ii) an office located within Texas for the purpose of accepting service of process.

(F) Comply with all applicable scheduling, operating, planning, reliability, customer registration, and settlement policies, protocols, guidelines, procedures, and other protocols established by the applicable independent organization including any independent organization requirements for 24-hour coordination with control centers for scheduling changes, reserve implementation, curtailment orders, and interruption plan implementation.

(G) Comply with the registration and certification requirements of the applicable independent organization and its system rules and protocols, or each contract for services with a third-party provider that is required to be registered with or certified by the applicable independent organization.

(H) Maintain adequate staffing and employee training to meet all service level commitments.

(I) Respond within five working days to any commission staff request for information.

(2) An applicant must provide the following information to the commission to certify as a REP under this section.

(A) An application for certification or amendment to a certificate must be made on a form approved by the commission, specify whether the applicant seeks to obtain or amend a REP certificate, and be accompanied by a signed, notarized affidavit attesting that all material provided in the application is true, correct, and complete. The affidavit must be signed by an executive officer of the applicant.

(B) The applicant's Texas Secretary of State registration to verify the information required under paragraphs (1)(A) and (B) of this subsection. A business name must not be deceptive, misleading, vague, otherwise contrary to §25.272 of this title (relating to Code of Conduct for Electric Utilities and Their Affiliates), or duplicative of a name previously approved for use by a REP certificate holder.

(C) The applicant's current contact information required under paragraph (1)(D) of this subsection.

(D) The applicant's current office information required under paragraph (1)(E) of this subsection.

(E) Information on controlling persons, including:

(i) an ownership and corporate structure chart that includes the share percentage each person holds, including:

(ii) a list of the registrant's and corporate parent's affiliates identified by name and type of commission registration, provided via external storage for digital media, in Microsoft Excel format;

(iii) a list of all principals, provided via external storage for digital media, in Microsoft Excel format;

(iv) a list of all executive officers, provided via external storage for digital media, in Microsoft Excel format; and

(F) A statement affirming compliance with paragraphs (1)(F)-(H) of this subsection and a short summary describing how the applicant has complied with each subparagraph.

(G) The project and item number where the applicant has filed its Emergency Operations Plan as required under §25.53 of this title (relating to Electric Service Emergency Operations Plans).

(H) An applicant for an Option 1 REP certificate must designate one of the following categories as its geographic service area:

(i) The geographic area of the entire state of Texas;

(ii) A specific geographic area (indicating the zip codes applicable to that area);

(iii) The service area of one or more specific TDUs, municipal utilities, or electric cooperatives in which competition is offered; or

(iv) The geographic area of ERCOT or other independent organization to the extent it is within Texas.

(I) An applicant for an Option 2 REP certificate must include a signed, notarized affidavit stating that it will only contract with customers to provide one megawatt or more of energy. Within 30 days of commission approval of the application and before an Option 2 REP begins serving a customer, the Option 2 REP must file with the commission a signed, notarized affidavit from each customer with which it has contracted to provide one megawatt or more of energy. The affidavit may be submitted by the applicant while the application for an Option 2 REP certificate is pending. Each customer affidavit must state that the customer understands and accepts the REP's ability to provide continuous and reliable electric service based on the applicant's financial, managerial, and technical resources.

(J) An applicant for an Option 3 REP certificate must:

(i) identify the name of the PGC that owns the distributed generation facilities and affirm that the PGC is registered under §25.109 of this title (relating to Registration of Power Generation Companies and Self-Generators); and

(ii) provide a signed, notarized affidavit from an executive officer of the PGC confirming:

(I) the PGC operating the distributed generation facility conforms to the requirements of §25.211 of this title (relating to Interconnection of On-Site Distributed Generation (DG)) and §25.212 of this title (relating to Technical Requirements for Interconnection and Parallel Operation of On-Site Distributed Generation);

(II) the distributed generation facility is installed by a licensed electrician, consistent with the requirements of the Texas Department of Licensing and Regulation; and

(III) the distributed generation facility is installed in accordance with the National Electric Safety Code as adopted by the Texas Department of Licensing and Regulation and otherwise complies with all applicable local and regional building codes.

(e) Technical and managerial requirements. An Option 1 REP must have the technical and managerial resources and ability to provide continuous and reliable retail electric service to customers, in accordance with its customer contracts, PURA, commission rules, applicable independent organization protocols, and other applicable laws. This subsection does not apply to an Option 2 or Option 3 REP.

(1) Technical and managerial resource requirements. The following are technical and managerial resource requirements a REP must maintain.

(A) One or more executive officers or employees in managerial positions whose combined experience in the competitive electric industry or competitive gas industry equals or exceeds 15 years. A third-party provider's experience may not be used to meet this requirement.

(B) At least one executive officer or employee who has five years of experience in energy commodity risk management of a substantial energy portfolio. Alternatively, the REP may enter into a contract for a term not less than two years with a third-party provider of commodity risk management services that has been providing such services for a substantial energy portfolio for at least five years. A substantial energy portfolio means managing electricity or gas market risks with a minimum value of at least $10,000,000.

(C) The capability and effective procedures to be the primary point of contact for retail electric customers for distribution system service in accordance with applicable commission rules, including procedures for relaying outage reports to the TDU on a 24-hour basis.

(D) A customer service plan that describes how the REP complies with the commission's customer protection and anti-discrimination rules.

(2) Technical and managerial documentation requirements. The following must be provided by an applicant to demonstrate compliance with the technical and managerial requirements under paragraph (1) of this subsection.

(A) A list of all third-party providers and a description of their responsibilities and delegation of authority, provided via external storage for digital media, in Microsoft Excel format.

(B) Resumes showing prior experience of one or more of the applicant's executive officers or employees in the competitive retail electric industry or competitive gas industry to demonstrate at least 15 years of experience and, if applicable, five years' experience in commodity risk management.

(C) If relying upon a third-party provider for commodity risk management services to satisfy the requirement for paragraph (1)(B) of this subsection, a copy of the executed contract is required.

(D) Any complaint history, disciplinary record and compliance record during the ten years immediately preceding the filing of the application regarding: the applicant; the applicant's and corporate parent's affiliates that provide utility-like services such as telecommunications, electric, gas, water, or cable service; the applicant's principals; and any person that merged with any of the preceding persons.

(i) The complaint history, disciplinary record, and compliance record must include information from any federal agency including the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission; any self-regulatory organization relating to the sales of securities, financial instruments, physical or financial transactions in commodities, or other financial transactions; state public utility commissions, state attorney general offices, or other regulatory agencies in states where the applicant is doing business or has conducted business in the past including state securities boards or commissions, the Texas Secretary of State, Texas Comptroller's Office, and Office of the Texas Attorney General. Relevant information must include the type of complaint, status of complaint, resolution of complaint, and the number of customers in each state where complaints occurred.

(ii) The applicant may request to limit the inclusion of this information if it would be unduly burdensome to provide, so long as the information provided is adequate for the commission to assess the applicant's and the complaint history of the applicant's principals and affiliates, disciplinary record, and compliance record.

(iii) Any complaint information on file at the commission may also be considered when reviewing the application.

(E) The following statements must be supported by a signed notarized affidavit made by an executive officer of the applicant.

(i) A statement indicating whether the applicant or the applicant's principals are currently under investigation or have been penalized by an attorney general or any state or federal regulatory agency for violation of any deceptive trade or consumer protection laws or regulations.

(ii) A statement that identifies whether the applicant or applicant's principals have been convicted or found liable for fraud, theft, larceny, deceit, or violations of any securities laws, customer protection laws, or deceptive trade laws in any state.

(iii) A statement that the applicant will register with or be certified by the applicable independent organization and that the applicant will comply with the technical and managerial requirements of this subsection; and that third-party providers with whom the applicant has a contractual relationship are registered with or certified by the independent organization, as appropriate, and will comply with all system rules and protocols established by the applicable independent organization.

(iv) A statement that describes an applicant's relationship with any of the following persons.

(I) Identification of all of the applicant's principals, executive officers, employees, third-party providers, and third-party provider's employees that:

(-a-) exercised direct or indirect control over a REP that experienced a mass transition of the REP's customers under §25.43 of this title (relating to Provider of Last Resort (POLR)) at any time within the six months prior to the mass transition;

(-b-) exercised direct or indirect control at any time within the six months prior to a market participant having had its ERCOT SFA terminated or a similar agreement for an applicable independent organization terminated;

(-c-) exercised direct or indirect control within the prior six months of a market participant having exited an electricity or gas market with outstanding payment obligations that remain outstanding; or

(-d-) that have been barred, in any way, participation by commission order.

(II) If a relationship exists as described in subclause (I) of this clause, the applicant must include in the affidavit for each such relationship:

(-a-) the name of the person;

(-b-) the name of the REP that experienced a mass transition of its customers under §25.43 of this title or market participant whose SFA was terminated or exited a market with outstanding payment obligations;

(-c-) details about the person's relationship with the REP or market participant;

(-d-) factual statements about the events that necessitated this response, including, if applicable, whether and, if so, how the REP that experienced a mass transition of its customers under §25.43 of this title settled all outstanding payment obligations;

(-e-) the person's current relationship or position with the applicant; and

(-f-) the extent of the person's apparent or actual authority to act in such a way that may be perceived as having direct or indirect control over the applicant.

(f) Financial requirements. An Option 1 REP must maintain compliance with paragraph (1) of this subsection and, as applicable, paragraph (2) and (3) of this subsection. This subsection does not apply to an Option 2 or Option 3 REP.

(1) Access to capital. A REP must maintain the requirements of subparagraphs (A) or (B) of this paragraph on an ongoing basis.

(A) A REP may maintain an executed version of the commission approved standard form irrevocable guaranty agreement.

(i) The guarantor must be:

(I) One or more affiliates of the REP;

(II) A financial institution with an investment-grade credit rating; or

(III) A provider of wholesale power supply for the REP, or one of such power provider's affiliates, with whom the REP has executed a power purchase agreement.

(ii) The guarantor must have:

(I) An investment-grade credit rating; or

(II) Tangible net worth greater than or equal to $100 million, a minimum current ratio (defined as current assets divided by current liabilities) of 1.0, and a debt to total capitalization ratio not greater than 0.60, where all calculations exclude unrealized gains and losses resulting from valuing to market the power contracts and financial instruments used as supply hedges to serve load.

(B) A REP may maintain an irrevocable stand-by letter of credit with a face value as determined in clause (i) of this subparagraph and based on the number of electronic service identifiers (ESI IDs) the REP serves. Additionally, for the first 24 months a REP is serving load it must maintain not less than one million dollars in shareholders' equity.

(i) Figure: 16 TAC §25.107(f)(1)(B)(i) (.pdf)

(ii) The number of ESI IDs includes all customer classes to which a REP provides retail electric service.

(iii) As the number of ESI IDs served by the REP increases, the irrevocable stand-by letter of credit must be adjusted to reflect the required value as determined in clause (i) of this subparagraph. As the number of ESI IDs served by the REP decreases, the irrevocable stand-by letter of credit may be adjusted to reflect the required value as determined in clause (i) of this subparagraph.

(iv) For the first 24 months a REP is serving load, a REP must not make any distribution or other payment to any shareholders, affiliates, or corporate parent's affiliates if, after giving effect to the distribution or other payment, the REP's shareholders' equity is less than one million dollars. Distributions or other payments include, but are not limited to, dividend distributions, redemptions and repurchases of equity securities, and loans to shareholders or affiliates.

(v) After a REP has continuously served load for 24 months, a prescribed amount of maintained shareholders' equity is no longer required.

(2) Customer deposits and prepayments. A REP certified to collect customer deposits must comply with this paragraph and the requirements of §25.487 of this title (relating to Credit Requirements and Deposits). A REP certified to collect customer prepayments must comply with this paragraph and the requirements of §25.498 of this title (relating to Prepaid Service).

(A) A REP must maintain customer deposits in an escrow account, segregated cash account, or provide an irrevocable stand-by letter of credit. A REP must maintain customer prepayments in an escrow account or provide an irrevocable stand-by letter of credit.

(i) If a REP is certified to collect both customer deposits and prepayments then the same escrow account or irrevocable stand-by letter of credit must be used and maintained by the REP to protect customer deposits and prepayments. A REP certified to collect both customer deposits and prepayments may not use a segregated cash account to protect customer deposits and prepayments.

(ii) For customer deposits, the escrow account, segregated cash account, or an irrevocable stand-by letter of credit must be adjusted, as necessary, to maintain a minimum of 100% coverage of the REP's outstanding customer deposits held at the close of each calendar month.

(iii) For customer prepayments, a REP must maintain, at minimum, protection for all customer prepayments that equals or exceeds $50. The balance of an escrow account or an irrevocable stand-by letter of credit must be adjusted, as necessary, to maintain a minimum of 100% coverage of customer prepayment funds equal to or exceeding $50 held at the close of each calendar month.

(B) Any irrevocable stand-by letter of credit provided under this paragraph must be in addition to the irrevocable stand-by letter of credit required by paragraph (1)(B) of this subsection.

(3) Bankruptcy disclosure. If a REP files a petition for bankruptcy, is the subject of an involuntary bankruptcy proceeding, or in any other manner becomes insolvent, including being in default with the applicable independent organization or with a TDU:

(A) The REP must notify the commission within three working days of this event and must file with the commission a summary of the nature of the event; and

(B) The notification must be filed in the commission project number established for notices prescribed under this paragraph. If the REP has filed a petition for bankruptcy, then the REP must include in its filing the petition that initiated the bankruptcy.

(4) Financial documentation requirements. The following must be provided, as applicable, by an applicant to demonstrate compliance with the financial requirements under paragraphs (1), (2), and (3) of this subsection. Additionally, the applicant must provide a summary of any history of insolvency, bankruptcy, dissolution, merger, or acquisition of the applicant or any predecessors in interest during the 60 calendar months immediately preceding the filing of the application.

(A) Investment-grade credit ratings must be documented by reports from a credit reporting agency. The report the applicant provides must be the most recently released report by the credit reporting agency.

(B) Tangible net worth, current ratio, and debt to capitalization ratio calculations must be supported by a signed, notarized affidavit from an executive officer of the guarantor that attests to the accuracy of the calculations and be documented by:

(i) audited financial statements of the guarantor for the most recently completed calendar or fiscal year and include the independent auditor's report and accompanying notes; or

(ii) unaudited financial statements of the guarantor for the most recently completed quarter.

(I) Unaudited financial statements must include a signed, notarized affidavit from the guarantor, in addition to any other provided affidavits, which attests to the accuracy, in all material respects, of the information provided in the unaudited financial statements.

(II) Three consecutive months of monthly statements may be submitted in lieu of quarterly statements, if quarterly statements are not available.

(III) The requirement for financial statements may be satisfied by filing a copy of or providing an electronic link to the guarantor's most recent statement that contains unaudited financials filed with any agency of the federal government, including without limitation, the U.S. Securities and Exchange Commission.

(C) Shareholders' equity must be documented by the audited or unaudited financial statements of the applicant for the most recently completed quarter.

(i) Audited financial statements must include the independent auditor's report and accompany notes.

(ii) Unaudited financial statements must include a signed, notarized affidavit, in addition to any other provided affidavits, which attests to the accuracy, in all material respects, of the information provided in the unaudited financial statements.

(I) Three consecutive months of monthly statements may be submitted in lieu of quarterly statements if quarterly statements are not available.

(II) The requirement for financial statements may be satisfied by filing a copy of or providing an electronic link to the REP's most recent statement that contains unaudited financials filed with any agency of the federal government, including without limitation, the U.S. Securities and Exchange Commission.

(D) Segregated cash accounts must be documented by a current account statement.

(i) The account statement must clearly identify:

(I) the name of the financial institution where the applicant has established the account;

(II) the account number; and

(III) the account name, which must clearly indicate the account is designated for containing only customer deposits.

(ii) The account must be maintained at a financial institution that is supervised or examined by the Office of the Comptroller of the Currency or a state banking department and is a:

(I) U.S. domestic bank; or

(II) a domestic office of a foreign bank with an investment-grade credit rating.

(iii) An executed agreement with a provider of credit that is not affiliated with the applicant or the applicant's corporate parent, that governs the control and management of the account must be provided. The agreement must identify that the account only holds customer deposits, and that the customer deposits are not the property of the REP or in the REP's control, unless, if allowed by the REP's terms of service, the customer deposits are applied to a final bill or to satisfy unpaid amounts.

(E) Escrow accounts must be documented by a current account statement and the escrow account agreement.

(i) The account statement must clearly identify:

(I) the name of the financial institution where the applicant has established the account; and

(II) the account number.

(ii) The account must be maintained at a financial institution that is supervised or examined by the Office of the Comptroller of the Currency or a state banking department and is a:

(I) U.S. domestic bank; or

(II) a domestic office of a foreign bank with an investment-grade credit rating.

(iii) The escrow account agreement must provide that the account holds customer deposits and prepayments only, and that the customer deposits and prepayments will be held in trust by the escrow agent and will not be the property of the REP or in the REP's control, unless, if allowed by the REP's terms of service, the customer deposits and prepayments are applied to a final bill or to satisfy unpaid amounts.

(F) Irrevocable stand-by letters of credit provided under paragraphs (1) and (2) of this subsection must use the standard form irrevocable stand-by letter of credit template approved by the commission. The original document of the irrevocable stand-by letter of credit must be provided in a manner established by the commission.

(i) The irrevocable stand-by letter of credit must be maintained at a financial institution that is supervised or examined by the Office of the Comptroller of the Currency or a state banking department and is a:

(I) U.S. domestic bank; or

(II) a domestic office of a foreign bank with an investment-grade credit rating.

(ii) The irrevocable stand-by letter of credit must:

(I) be irrevocable for a period not less than twelve months;

(II) automatically renew, and only expire if prior notice is provided to the commission at least 90 days before the expiration;

(III) be payable to the commission;

(IV) permit a draw to be made in part or in full;

(V) permit a draw to be made with the return of the original document or a photocopy;

(VI) permit a draw to be made, among other ways, through over-night mail;

(VII) permit the commission's executive director or the executive director's designee to draw on the irrevocable stand-by letter of credit; and

(VIII) require commission staff approve all amendment requests to decrease the value of the irrevocable stand-by letter of credit prior the value of the irrevocable stand-by letter of credit decreasing. Amendments to decrease the value of the irrevocable stand-by letter of credit must be accompanied by a notarized affidavit signed by an executive officer of the REP and include , as applicable, the current number of ESI IDs the REP serves, the value of customer deposits and prepayments the REP is liable for.

(G) Irrevocable guaranty agreements must be executed on the commission approved standard form irrevocable guaranty agreement and must obligate the guarantor to meet commission demands on behalf of the applicant.

(i) The guarantor's obligation to satisfy the commission's demand for payment must be in an amount not less than $1,500,000 and must be absolute, and the guarantor may not avoid its obligation for any reason.

(ii) The commission approved standard form irrevocable guaranty agreement must not have an expiration date. The irrevocable guaranty agreement may only be terminable after 90 days advance notice has been provided to the commission in a commission approved method. Until the 90 days advance notice has elapsed or until an amendment to the REP's financial qualifications is approved, whichever occurs first, the guarantor must remain completely and absolutely liable to the extent provided by the terms of the agreement.

(H) A power purchase agreement must be documented by providing a copy of the executed agreement between the applicant and the guarantor.

(5) Commission draw on financial instruments. The commission may seek full or partial funds from a REP's financial resources in any of the following circumstances:

(A) An applicable independent organization performs a mass transition of a REP's customers under §25.43 of this title;

(B) The commission issues an order revoking a REP's certificate;

(C) ERCOT terminates a REP's SFA or the applicable organization terminates a similar agreement; or

(D) The commission's executive director finds that a REP has failed to satisfy its financial obligations under PURA, the commission's substantive rules, or the applicable independent organization's protocols.

(6) Proceeds from financial instruments.

(A) Proceeds from an irrevocable stand-by letter of credit or irrevocable guaranty agreement provided under this subsection may be used to satisfy the following obligations of a REP, in the following order of priority:

(i) first, to return of outstanding customer deposits and prepayments if not credited by or transferred to each customer's new REP of record or otherwise returned to each customer by the REP;

(ii) second, to assist in the payment of customer deposits to REPs that volunteer to provide service in a mass transition event under §25.43 of this title for low-income customers as identified by the Low-Income List Administrator under to §25.45 of this title (relating to Low-Income List Administrator);

(iii) third, if available, to assist in the payment of customer deposits to REPs that are designated to provide service in a mass transition event under §25.43 of this title for low-income customers as identified by the Low-Income List Administrator under to §25.45 of this title (relating to Low-Income List Administrator);

(iv) fourth, if available, to assist in the payment of residential customer deposits to REPs that volunteer to provide service in a mass transition event under §25.43 of this title;

(v) fifth, if available, to assist in the payment of residential customer deposits to REPs that are designated to provide service in a mass transition event under §25.43 of this title for customers;

(vi) sixth, if available, for outstanding payments to the applicable independent organization;

(vii) seventh, if available, for outstanding payments to a TDU; and

(viii) eighth, if available, for administrative penalties assessed under Chapter 15 of PURA.

(B) Proceeds from an irrevocable stand-by letter of credit or irrevocable guaranty agreement provided under this subsection must, to the extent that the proceeds are not needed to satisfy an obligation set out in subparagraph (A) of this paragraph, be paid to the applicable entity identified as the Applicant on the irrevocable stand-by letter of credit or the Guarantor on the irrevocable guaranty agreement.

(g) Persons prohibited from exercising control. An Option 1 REP must maintain compliance with this subsection at all times. This subsection does not apply to an Option 2 or Option 3 REP.

(1) In no instance may any of the following persons control the REP or be relied upon to meet the requirements of subsections (d) and (e) of this section:

(A) a person who was a principal of a REP that experienced a mass transition of the REP's customers under §25.43 of this title at any time within the six months prior to the mass transition;

(B) a person who was a principal of, at any time within the prior six months, a market participant whose ERCOT SFA or similar agreement for an independent organization other than ERCOT was terminated;

(C) a person who was a principal of, at any time within the prior six months, a market participant that exited an electricity or gas market with outstanding payment obligations that remain outstanding; or

(D) a person who, by commission order, is prohibited from serving as a principal for any commission-regulated entity.

(2) To the extent an independent organization or TDU is aware that a person who is otherwise barred from exercising direct or indirect control over a REP is acting in violation of this section or other commission substantive rules, the independent organization or TDU has an affirmative duty to report this information to the division of the commission charged with enforcement of the commission's substantive rules.

(h) Update or relinquishment of certification. A REP must maintain and update the information required by subsections (d), (e), and (f) of this section, as applicable, on an ongoing basis.

(1) A REP must electronically submit updated information in the manner established by the commission within five working days of any change to its contact information as identified in subsection (d)(1)(D) or this section.

(2) A REP must apply to amend its certification within ten working days of a material change to its certification. A REP may apply for the commission to approve a material change by filing an application to amend its certification before the material change is anticipated to occur. A material change includes:

(A) a change in ownership, control, corporate restructuring, or transfer of a REP certificate;

(B) a name change (including addition of assumed names);

(C) for Option 1 REPs, a change in service area;

(D) for Option 1 REPs, a change in technical or managerial qualifications, including:

(i) any information previously provided or attested to under the requirements of subsection (d) of this section,

(ii) personnel relied upon for experience, and

(iii) changes, termination, or expiration of a contract to provide commodity risk management services; and

(E) for Option 1 REPs, a change in financial qualifications, including:

(i) the REP's certificated method for maintaining its access to capital requirement of subsection (f)(1) of this section, including terminations made to the irrevocable standby guaranty agreement or power purchase agreement;

(ii) the certificated method for protecting its customer deposits and prepayments, and

(iii) the approved account for protecting customer deposits and prepayments.

(3) A REP that no longer serves customers may relinquish its REP certificate by filing an application for relinquishment on a form prescribed by the commission. A REP that does not serve customers for two consecutive years must relinquish its certificate. Prior to relinquishing its certificate, the REP must no longer serve any customers. At least 45 days prior to ceasing operations, a REP that intends to cease operations as a REP and is not seeking to relinquish its REP certificate must file a notice in the commission project number established under this paragraph to notify the commission of a REP ceasing operations. A REP must not cease operations as a REP without prior notice of at least 45 days to each of the REP's customers to whom the REP is providing service on the planned date of cessation of operations, and to other affected persons, including the applicable independent organization, TDUs, electric cooperatives, municipally owned utilities, generation suppliers, and providers of last resort. If a REP improperly transfers customers without providing adequate notice, under §25.493 of this title (relating to Acquisition and Transfer of Customers from one Retail Electric Provider to Another) then the REP may be subject to enforcement proceedings even after relinquishment of its certificate. Within the application to relinquish its certificate a REP must include a statement explaining whether customers' deposits were refunded to the customers or transferred to an alternative REP. The statement must be supported by a signed, notarized affidavit from an executive officer of the REP.

(i) Reporting requirements. An Option 1 REP must file with the commission an annual and a semi-annual report each year. Option 2 and Option 3 REPs do not have reporting obligations under this section.

(1) The annual report is due on March 5, or

(A) 65 days after the end of the REP's fiscal year; or

(B) if the REP elects to maintain an executed version of the commission approved standard form irrevocable guaranty agreement as its access to capital requirement under subsection (f)(1)(A) of this section, then 65 days after the end of the guarantor's fiscal year.

(2) The semi-annual report is due on August 15, or

(A) 225 days after the end of the REP's fiscal year; or

(B) if the REP elects to maintain an executed version of the commission approved standard form irrevocable guaranty agreement as its access to capital requirement under subsection (f)(1)(A) of this section, then 225 days after the end of the guarantor's fiscal year.

(3) The annual and semi-annual report must include the following information.

(A) A signed, notarized affidavit from an executive officer affirming that the certificate holder is not in material violation of any of the requirements of its certificate under this section and that the information reported in the entire report is true and correct.

(B) Any changes in ownership, control, corporate restructuring, or transfer of a REP certificate.

(C) Any changes in management, experience, and persons relied on for certification in subsection (e) of this section including the person or third-party provider acting as the REP's risk manager.

(D) A list of all principals, provided via external storage for digital media, in Microsoft Excel format.

(E) A list of all executive management, provided via external storage for digital media, in Microsoft Excel format.

(F) A list of all third-party providers and a description of their responsibilities and delegation of authority, provided via external storage for digital media, in Microsoft Excel format.

(G) A copy of a REP's current LSE contact information kept on file with ERCOT, including a copy of all Notices of Change of Information submitted to ERCOT in the time since the REP's last annual or semi-annual report was filed. To the extent the REP's designated QSE is the same entity as the REP or an affiliate of the REP or REP's corporate parent, the REP should also include a copy of the current QSE and counter party contact information kept on file with ERCOT, including a copy of all notices of change of information submitted to ERCOT in the time since the REP's last annual or semi-annual report was filed.

(H) Demonstration of ongoing compliance with the financial requirements of subsection (f) of this section.

(i) This can include, but not be limited to:

(I) calculations demonstrating adequate tangible net worth and financial ratios,

(II) adequate shareholders' equity,

(III) a statement of the value of customer deposits and prepayments the REP is currently liable for, and

(IV) a current account statement demonstrating that the balance of the account in which customer deposits and prepayments are held 100% covers the value of customer deposits and prepayments the REP is liable for.

(ii) A REP must submit relevant documentation as required by subsection (f)(4) of this section to demonstrate its ongoing compliance with the financial requirements of subsection (f)(1) and (2) of this section.

(iii) Financial statements provided as part of the annual and semi-annual report must be as of the end of the most recent fiscal quarter.

(4) In addition to the information required in paragraph (3) of this subsection, the annual report must also include the following information.

(A) Any changes in a REP's contact information identified in subsection (d)(1)(D) of this section.

(B) A list of aggregators with whom the REP has conducted business in the reporting period, and the commission registration number for each aggregator.

(5) Reporting under this subsection does not change the requirement for a REP to amend its certification to reflect the change in accordance with subsection (h) of this section.

(j) Protection of TDU financial integrity.

(1) A TDU must not require a deposit from a REP except to secure the payment of transition charges as provided in §25.108 of this title (relating to Financial Standards for Retail Electric Providers Regarding Billing and Collection of Transition Charges), or if the REP has defaulted on one or more payments to the TDU. A TDU may impose credit conditions on a REP that has defaulted to the extent specified in its statewide standardized tariff for retail delivery service and as allowed by commission substantive rules.

(2) A TDU must create a regulatory asset for bad debt expenses, net of collateral posted under paragraph (1) of this subsection and bad debt already included in its rates, resulting from a REP's default on its obligation to pay delivery charges to the TDU. Upon a review of reasonableness and necessity, a reasonable level of amortization of such regulatory asset will be included as a recoverable cost in the TDU's rates in its next rate case or such other rate recovery proceeding as deemed necessary.

(k) Revocation of a REP certificate. A certificate granted under this section may be revoked if the commission finds that a significant violation of PURA, commission substantive rules, or protocols adopted by the applicable independent organization has occurred. The revocation of a REP's certificate requires the cessation of all REP activities in the state of Texas, in accordance with commission order. The commission may impose an administrative penalty on a person for a violation of PURA, commission substantive rules, or protocols adopted by an independent organization. Significant violations include, but are not limited to:

(1) Providing false or misleading information to the commission, including a failure to disclose any information required by this section;

(2) Engaging in fraudulent, unfair, misleading, deceptive, or anticompetitive practices, or unlawful discrimination;

(3) Switching, or causing to be switched, the REP for a customer without first obtaining the customer's permission;

(4) Billing an unauthorized charge, or causing an unauthorized charge to be billed, to a customer's retail electric service bill;

(5) Failure to maintain continuous and reliable electric service to a customer or customers pursuant to this section;

(6) Failure to maintain financial resources in accordance with subsection (f) of this section;

(7) The inability to meet financial obligations on a reasonable and timely basis;

(8) Failure to timely remit payment for invoiced charges to an independent organization;

(9) Failure to observe any applicable scheduling, operating, planning, reliability, and settlement policies, protocols, guidelines, procedures, and other protocols established by an applicable independent organization;

(10) A pattern of not responding to commission inquiries or customer complaints in a timely fashion;

(11) Suspension or revocation of a registration, certification, or license by any state or federal authority;

(12) Termination of the REP's SFA with ERCOT or similar agreements with a applicable independent organization other than ERCOT;

(13) Conviction of a felony by the certificate holder, a person controlling the certificate holder, or principal employed by the certificate holder, or any crime involving fraud, theft, or deceit related to the certificate holder's service;

(14) Failure to provide retail electric service to a customer or customers within 24 months of the certificate being granted by the commission or ceasing to provide retail electric service for a period of 24 months;

(15) Failure to serve as a POLR if required to do so by the commission;

(16) Failure to timely remit payment for invoiced charges to a TDU pursuant to §25.214, of this title (relating to Terms and Conditions of Retail Delivery service Provided by Investor Owned Transmission and Distribution Utilities);

(17) Erroneously imposing switch-holds or failing to remove switch-holds within the timeline described in §25.480 of this title (relating to Bill Payment and Adjustments);

(18) Failure to comply with the terms of the REP's suspension;

(19) Failure to comply with §25.272 of this title (relating to Code of Conduct for Electric Utilities and Their Affiliates); and

(20) Other significant violations or a pattern of failures to meet the requirements of PURA, commissions rules or orders, or protocols adopted by the applicable independent organization.

(l) Suspension of a REP's ability to acquire new customers. The commission or presiding officer may suspend a REP's ability to acquire new customers upon a showing of facts that reasonably support the occurrence of a significant violation of PURA, commission substantive rules, or protocols adopted by the applicable independent organization, consistent with subsection (k) of this section. A suspension of a REP's ability to acquire new customers may be limited to specific customer classes. The commission may also impose administrative penalties and other conditions on a REP whose ability to acquire new customers has been suspended.

(1) A proceeding for suspension of a REP's ability to acquire new customers under this subsection is initiated by the filing of a petition for suspension by commission staff.

(A) Commission staff will provide reasonable notice of a petition for suspension to the affected REP in accordance with §22.55 of this title (relating to Notice in Other Proceedings).

(B) The REP may submit a request for hearing on the petition for suspension within 20 days after the date the REP receives notice of the petition. A request for hearing received more than 20 days after the date the petition is received by the REP will be denied by the presiding officer.

(C) If the REP does not submit a request for hearing within 20 days after receiving notice of the petition for suspension, the presiding officer may administratively approve the petition for suspension under §22.35 of this title (relating to Informal Disposition). The commission delegates authority to the presiding officer to approve a petition for suspension under this subsection with a notice of approval in accordance with §22.35(b)(1) of this title.

(D) If the presiding officer approves the petition for suspension, commission staff will direct ERCOT to stop processing move-in requests for the REP.

(E) At any time during the pendency of the proceeding, without limitation, the presiding officer may issue an emergency order directing ERCOT to stop processing move-in requests for the REP if the presiding officer determines such authorization to be in the public interest.

(2) The presiding officer may lift the suspension under this subsection upon a demonstration of the following:

(A) if applicable, the REP has resolved all violations underlying the suspension and fulfilled all conditions for reinstatement;

(B) the REP is in compliance with all technical, managerial, and financial requirements in this section; and

(C) commission staff recommends that the suspension be lifted.

(3) A REP subject to suspension of acquiring new customers under this section must maintain compliance with this section and all other applicable commission substantive rules while suspended and must continue to serve existing customers consistent with PURA, commission substantive rules, and protocols adopted by the applicable independent organization.

(4) Nothing in this subsection limits the commission's ability to revoke a REP's certificate or proceed with a draw on a REP's financial instruments. Commission staff retains the discretion to seek to revoke the certificate of a REP subject to suspension, as appropriate.

§25.109.Registration by Power Generation Companies and Self-Generators.

(a) Applicability. This section contains the registration and renewal of registration requirements for a power generation company (PGC) as defined by §25.5 of this title (relating to Definitions) and a self-generator as defined in this section.

(1) A person is subject to and must register under this section before the first day it generates electricity.

(2) A person that owns a qualifying facility (QF) and will sell electricity at wholesale or is an exempt wholesale generator (EWG) must register under this section as a PGC.

(3) A person already certified as a PGC or self-generator as of the effective date of this section must come into compliance with the requirements of this section no later than June 1, 2023.

(A) A PGC or self-generator must complete and file a commission approved form that demonstrates the PGC or self-generator is in compliance with this section on or before June 1, 2023.

(B) A PGC or self-generator who does not demonstrate compliance with this section on or before June 1, 2023, may be subject to revocation under subsection (i) of this section.

(b) Definitions. In this section, the following definitions apply unless the context indicates otherwise.

(1) Generating facility--all generating units located at, or providing power to, the electricity-consuming equipment at an entire facility or location.

(2) Principal--includes:

(A) A sole proprietor;

(B) A general partner;

(C) An executive of a company (e.g., a president, chief executive officer, chief operating officer, chief financial officer, general counsel, or equivalent position);

(D) A manager, managing member, or a member vested with the management authority of a limited liability company or limited liability partnership;

(E) A shareholder with more than 10% equity of the person, if a public company; or

(F) A person who has apparent or actual authority to exercise control over the person or exercises control over a principal otherwise described by this subsection.

(3) Self-generator--A QF that does not sell electricity at wholesale or provides electricity only to the purchaser of the facility's thermal output, or a person that:

(A) is not a PGC;

(B) owns an electrical generating facility rated at one megawatt or more, but not more than the maximum megawatt consumption of the co-located load (using historical megawatt consumption data or expectations of megawatt consumption if the co-located load is new or an addition has been made to the existing co-located load); and whose primary purpose is to serve the co-located load, but can sell up to the lesser of 10% of its capacity rating or 10 megawatts of wholesale energy or ancillary services on any given day; and

(C) owns or is under common ownership with the co-located load.

(c) Initial registration information. To register as a PGC or a self-generator a person must use the registration form prescribed by the commission. A person registering as a PGC or a self-generator must provide the following information.

(1) The registrant's contact information, including the registrant's:

(A) physical and business mailing address;

(B) business telephone number;

(C) business e-mail address;

(D) primary and secondary emergency contact; and

(2) The name of the current regulatory contact, the contact's e-mail address and telephone number, and if the regulatory contact is an internal staff member of the registrant.

(3) For each generating facility operated by the registrant:

(A) the name, address, county and power region of operation of each generating facility;

(B) whether the generating facility is an electric storage facility;

(C) the name of the transmission service providers interconnecting the generating facility; and

(D) the capacity rating for each generating unit following the rating method established in §25.91(f) of this title (relating to Generating Capacity Reports).

(4) A description of the types of services provided by the registrant that relate to the generation of electricity.

(5) An affidavit signed by a representative, official, officer, or other authorized person with binding authority over the registrant attesting that none of the registrant's principals:

(A) were principals of a commission-regulated person whose license was revoked by commission order within the prior six months of when they were a principal;

(B) were principals of any person registered with the Electric Reliability Council of Texas (ERCOT) whose standard form market participant agreement was terminated by ERCOT for misconduct within the prior six months of when they were a principal; or

(C) are otherwise prohibited by commission order from acting as a principal of a commission-regulated entity.

(d) Additional information required for PGC registration. In addition to the information required under subsection (c) of this section, a person registering as a PGC must also submit the following information to the commission.

(1) An affidavit signed by a representative, official, officer, or other authorized person with binding authority over the registrant attesting that the registrant:

(A) generates electricity that is intended to be sold at wholesale;

(B) does not own a transmission or distribution facility in this state other than an essential interconnecting facility, a facility not dedicated to public use, or a facility otherwise excluded from the definition of "electric utility" under §25.5 of this title (related to Definitions); and

(C) does not have a certified service area.

(2) The name of the registrant's corporate parent.

(3) A list of the registrant's and corporate parent's affiliates identified by name that buys and sells electricity at wholesale in Texas, sells electricity at retail in Texas, or is an electric cooperative or municipally owned utility in Texas.

(4) The applicable project and item number that the registrant has filed its initial Emergency Operations Plan in as required under §25.53 of this title (relating to Electric Service Emergency Operations Plans).

(5) As applicable, copies of the registrant's Federal Energy Regulatory Commission registration as a QF or an EWG.

(e) Additional information required for self-generator registration. In addition to the information required under subsection (c) of this section, a person registering as a self-generator must also submit an affidavit signed by a representative, official, officer, or other authorized person with binding authority over the registrant attesting:

(1) that the registrant's generating facilities will not be capable of producing more energy than the co-located load's maximum consumption;

(2) the registrant will not sell more than the lesser of 10% of its capacity rating or 10 megawatts of wholesale energy or ancillary services on any given day; and

(3) the registrant owns or is under common ownership with the co-located load.

(f) Update or relinquishment of registration. A PGC or self-generator may update or relinquish its registration.

(1) A PGC must complete the commission form to amend its registration within 30 days of a change to any information reported in response to subsections (c)(2) through (c)(4) and (d)(2) of this section.

(2) A self-generator must complete the commission form to amend its registration within in 30 days of a change to any of the information reported in response to subsection (c)(2)-(4) of this section. If a self-generator's generating facilities ever produce more energy than the maximum potential load consumption level of the co-located load, or provides more than the lesser of 10% of its capacity rating or 10 megawatts at wholesale on any given day, then the self-generator must file an update to change its registration from a self-generator to a PGC.

(3) A PGC and self-generator must update, in a manner established by the commission, its contact information listed in subsection (c)(1) of this section within 30 days of a change.

(g) Review of registration of PGC or self-generator. Commission staff will review the submitted or updated registration form for sufficiency and submit a written recommendation to the presiding officer within 30 days from the date the registration was filed.

(1) If commission staff recommends the registration form be found insufficient, commission staff will notify the presiding officer in writing of the deficiencies as part of its recommendation. If the presiding officer finds the registration form to be insufficient, it will notify the registrant in writing of the finding and the specific deficiencies. The registrant will have 20 days from the issuance of the notice to cure the deficiencies. Commission staff will have 15 days to review the supplemental information submitted by the registrant and notify the presiding officer if any deficiencies remain. If the presiding officer determines that the deficiencies have not been cured within 20 days of the issuance of the notice, the presiding officer will reject the registration request without prejudice and notify the registrant of the rejection.

(2) Upon finding the registration sufficient, the presiding officer will approve the registration and issue a registration number to the PGC or self-generator.

(h) Renewal of registration. A PGC or self-generator must renew its registration on or before February 28 of every other calendar year by submitting the information required by subsection (c) and, as applicable, (d) and (e) of this section by submitting a statement that the PGC or self-generator's registration information on file with the commission is current and correct.

(1) A PGC or self-generator whose commission registration number is an even number must submit its registration renewal on all even number years.

(2) A PGC or self-generator whose commission registration number is an odd number must submit its registration renewal on all odd number years.

(i) Revocation of registration and administrative penalty. Registration of a PGC under this section is subject to revocation for a significant violation of statute or commission rules. The commission may impose an administrative penalty on a person for a violation of PURA, commission rules, or rules adopted by an independent organization, including:

(1) failure to comply with the reliability standards and operational criteria duly established by the independent organization certified under PURA §39.151 for the ERCOT power region;

(2) failure to observe any scheduling, operating, planning, reliability, or settlement policy, rule, guideline, or procedure established by ERCOT;

(3) providing false or misleading information to the commission, commission staff, or ERCOT;

(4) engaging in fraudulent, unfair, misleading, deceptive or anti-competitive practices;

(5) a pattern of failure to meet the requirements of statute, this section, or other commission rules, regulations or orders;

(6) suspension or revocation of a registration, certification, or license by any state or federal authority;

(7) failure to operate within the applicable legal parameters established by PURA §39.351; and

(8) failure to timely respond to commission or commission staff inquiries or customer complaints.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 29, 2022.

TRD-202203923

Adriana Gonzales

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 936-7322


SUBCHAPTER R. CUSTOMER PROTECTION RULES FOR RETAIL ELECTRIC SERVICE PROVIDERS

16 TAC §25.485, §25.495

Statutory Authority

The amended rules are proposed under PURA §14.002, which provides the commission with the authority to make adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction. PURA §15.051 which concerns customer complaints for acts or omissions by a public utility in violation or claimed violation of a law for which the commission has jurisdiction. PURA §17.001, §17.003, and §17.004 which collectively authorize the commission to impose customer protection standards in the electric market. PURA §39.351, which stipulates the requirements to register with the commission as a power generation company. PURA §39.352, which stipulates the requirements to certify with the commission as a REP. PURA §39.356 which authorizes the commission to suspend, revoke, or amend a REP certification for significant violations of PURA and PURA §39.357 which authorizes the commission to impose administrative penalties for significant violations of PURA by REPs. PURA §35.032 and §39.355, which require registration with the commission prior to serving as a power marketer.

Cross Reference to Statute: Public Utility Regulatory Act §§14.002, 15.051, 17.001, 17.003, 17.004, 35.032, 39.351, 39.352, 39.355, 39.356, and 39.357.

§25.485.Customer Access and Complaint Handling.

(a) Applicability. This section contains a customer's entitlement to reasonable access to a retail electric provider's (REP) or aggregator's representatives and identifies a customer's ability make a complaint against a REP or aggregator. REPs and aggregators are subject to processes of this section [The purpose of this section is] to ensure that retail electric customers have the opportunity for impartial and prompt resolution of disputes with REPs or aggregators.

(b) Customer access.

(1) A [Each] retail electric provider (REP) or aggregator must [shall] ensure that customers have reasonable access to its service representatives to make inquiries and complaints, discuss charges on customer's bills, terminate competitive service, and transact any other pertinent business.

(2) Telephone access must [shall] be toll-free and must [shall] afford customers a prompt answer during normal business hours.

(3) A [Each] REP must [shall] provide a 24-hour automated telephone message instructing the caller how to report any service interruptions or electrical emergencies.

(4) A [Each] REP or [and] aggregator must [shall] employ 24-hour capability for accepting a customer's rescission of the terms of service by telephone, pursuant to rights of cancellation in §25.474(j) of this title (relating to Selection of Retail Electric Provider).

(c) Complaint handling. A residential or small commercial customer has the right to make an informal or formal [a formal or informal] complaint to the commission in accordance with §22.242 of this title (relating to Complaints), and a terms of service agreement cannot impair this right. A REP or aggregator must [shall] not require a residential or small commercial customer as part of the terms of service to engage in alternative dispute resolution, including requiring complaints to be submitted to arbitration or mediation by third parties. A customer other than a residential or small commercial customer may agree as part of the terms of service to engage in alternative dispute resolution, including requiring complaints to be submitted to arbitration or mediation by third parties. However, nothing in this subsection is intended to prevent a customer other than a residential or small commercial customer from filing [to file] an informal or formal complaint with the commission if dissatisfied with the results of the alternative dispute resolution.

(d) Complaints to REPs or aggregators. A customer or applicant for service may submit a complaint in person, or by letter, facsimile transmission, e-mail, or by telephone to a REP or aggregator. The REP or aggregator must [shall] promptly investigate and advise the complainant of the results within 15 [21] days. A customer who is dissatisfied with the REP's or aggregator's review must [shall] be informed of the right to file a complaint with the REP's or aggregator's supervisory review process, if available, and, if not available, with the commission and the Office of Attorney General, Consumer Protection Division. Any supervisory review conducted by the REP or aggregator must [shall] result in a decision communicated to the complainant within ten business days of the request. If the REP or aggregator does not respond to the customer's complaint in writing, the REP or aggregator must [shall] orally inform the customer of the ability to obtain the REP's or aggregator's response in writing upon request.

(e) Complaints to the commission.

(1) Informal complaints.

[(A)] If a complainant is dissatisfied with the results of a REP's or aggregator's complaint investigation or supervisory review, the REP or aggregator must [shall] advise the complainant of the commission's informal complaint resolution process and the following contact information for the commission: Public Utility Commission of Texas, Customer Protection Division, P.O. Box 13326, Austin, Texas 78711-3326; (512) 936-7120 or in Texas (toll-free) 1-888-782-8477, fax (512) 936-7003, e-mail address: customer@puc.texas.gov [customer@puc.state.tx.us], internet address: www.puc.texas.gov [www.puc.state.tx.us], TTY (512)936-7136, and Relay Texas (toll-free) 1-800-735-2989.

(A) [(B)] Requirements applicable to informal complaints.

(i) A complaint must [Complainants should] include sufficient information [in a complaint] to identify the complainant and the company for which the complaint is made and describe the issue specifically. The following information should be included in the complaint:

(I) [(i)] The account holder's name, billing and service addresses, and telephone number;

(II) [(ii)] The name of the REP or aggregator;

(III) [(iii)] The customer account number or electric service identifier (ESI-ID);

(IV) [(iv)] An explanation of the facts relevant to the complaint;

(V) [(v)] The complainant's requested resolution; and

(VI) [(vi)] Any documentation that supports the complaint, including copies of bills or terms of service documents.

(ii) [(C)] All REPs and aggregators must [shall] provide the commission an email address to receive notification of customer complaints from the commission.

(iii) [(D)] The REP or aggregator must [shall] investigate all informal complaints and advise the commission in writing of the results of the investigation within 15 [21] days after the complaint is forwarded to the REP or aggregator.

(iv) [(E)] The commission must [shall] review the complaint information and the REP or aggregator's response and notify the complainant of the results of the commission's investigation.

(B) [(2)] Prohibited activities during pendency of informal complaint. While an informal complaint process is pending:

(i) [(A)] The REP or aggregator must [shall] not initiate collection activities, including disconnection of service or report the customer's delinquency to a credit reporting agency with respect to the disputed portion of the bill.

(ii) [(B)] A customer must [shall be obligated to] pay any undisputed portion of the bill and the REP may pursue disconnection of service for nonpayment of the undisputed portion after appropriate notice.

(C) [(3)] Informal complaint record retention. The REP or aggregator must [shall ] keep a record for two years after closure by the commission of all informal complaints forwarded to it by the commission. This record must [shall] show the name and address of the complainant, the date, nature and adjustment or disposition of the complaint. Protests regarding commission-approved rates or rates and charges that are not regulated by the commission, but which are disclosed to the customer in the terms of service disclosures, need not be recorded.

(2) [(4)] Formal complaints. If the complainant is not satisfied with the results of the informal complaint process, the complainant may file a formal complaint with the commission within two years of the date on which the commission closes the informal complaint. This process may include the formal docketing of the complaint as provided in §22.242 of this title (related to Complaints).

§25.495.Unauthorized Change of Retail Electric Provider.

(a) Process for resolving unauthorized change of retail electric provider (REP). If a REP is serving a customer without proper authorization pursuant to §25.474 of this title (relating to Selection of Retail Electric Provider), the REP, registration agent, and transmission and distribution utility (TDU) must [shall ] follow the procedures set forth in this subsection.

(1) Either the original REP or switching REP must [shall] notify the registration agent of the unauthorized change of REP as promptly as possible, using the process approved by the registration agent.

(2) As promptly as possible following receipt of notice by the REP, the registration agent must [shall] facilitate the prompt return of the customer to the original REP, or REP of choice in the case of a move-in.

(3) The affected REPs, the registration agent, and the TDU must [shall] take all actions necessary to return the customer to the customer's original REP, or REP of choice in the case of a move-in, as quickly as possible. The original REP is [does] not required [need] to obtain an additional authorization from the customer pursuant to §25.474 of this title in order to effectuate the provision of this section.

(4) The affected REPs, the registration agent, and the TDU must [shall] take all actions necessary to bill correctly all charges, so that the end result is that:

(A) the REP that served the customer without proper authorization must [shall] pay all transmission and distribution charges associated with returning the customer to its original REP, or REP of choice in the case of a move-in;

(B) the original REP has the right to bill the customer pursuant to §25.480 of this title (relating to Bill Payment and Adjustment) at the price disclosed in its terms of service from either:

(i) the date the customer is returned to the original REP; or

(ii) any prior date chosen by the original REP for which the original REP had the authorization to serve the customer.

(C) the REP that served the customer without proper authorization must [shall] refund all charges paid by the customer for the time period for which the original REP ultimately bills the customer within five business days after the customer is returned to the original REP, or REP of choice in the case of a move-in;

(D) the customer will [shall] pay no more than the price at which the customer would have been billed had the unauthorized switch or move-in not occurred;

(E) the TDU has the right to seek collection of non-bypassable charges from the REP that ultimately bills the customer under subparagraph (B) of this paragraph; and

(F) the REP that ultimately bills the customer under subparagraph (B) of this paragraph is responsible for non-bypassable charges and wholesale consumption for the customer.

(5) The original REP must [shall] provide the customer all benefits or gifts associated with the service that would have been awarded had the unauthorized switch or move-in not occurred, upon receiving payment for service provided during the unauthorized change;

(6) The affected REPs must [shall] communicate with the customer as appropriate throughout the process of returning the customer to the original REP or REP of choice and resolving any associated billing issues.

(7) In a circumstance where paragraph (4) of this subsection is not applicable or its requirements cannot be effectuated, the market participants involved must [shall] work together in good faith to rectify the unauthorized switch or move-in in a manner that affords the customer and market participants involved a level of protection comparable to that required in this subsection.

(b) Customer complaints, record retention and enforcement.

(1) A customer [Customers] may file a complaint with the commission, pursuant to §25.485 of this title (relating to Customer Access and Complaint Handling), against a REP for an alleged failure to comply with the provisions of this section.

(2) Upon receipt of a customer complaint, a REP must [each REP shall]:

(A) respond to the commission within 15 [21 ] calendar days after receiving the complaint and in the response to the complaint provide to the commission all documentation relied upon by the REP and related to the:

(i) authorization and verification to switch the customer's service; and

(ii) corrective actions taken to date, if any.

(B) cease any collection activity related to the alleged unauthorized switch or move-in until the complaint has been resolved by the commission.

[(c) This section is effective June 1, 2004.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 29, 2022.

TRD-202203924

Adriana Gonzales

Rules Coordinator

Public Utility Commission of Texas

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 936-7322


PART 4. TEXAS DEPARTMENT OF LICENSING AND REGULATION

CHAPTER 60. PROCEDURAL RULES OF THE COMMISSION AND THE DEPARTMENT

SUBCHAPTER H. COMPLAINT HANDLING

16 TAC §§60.220 - 60.222

The Texas Department of Licensing and Regulation (Department) proposes new rules at 16 Texas Administrative Code (TAC), Chapter 60, Subchapter H, §§60.220, 60.221, and 60.222, regarding inspection provisions. These proposed changes are referred to as the "proposed rules."

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

The rules under 16 TAC, Chapter 60, implement Texas Occupations Code, Chapter 51, Texas Department of Licensing and Regulation.

House Bill (HB) 1560, 87th Legislature, Regular Session (2021), the Sunset legislation for the Department, added new inspection provisions to Occupations Code, Chapter 51, the Department's enabling statute (see HB 1560, Article 1, Section 1.05). HB 1560 added new §51.211 to Chapter 51, requiring the department to conduct risk-based inspections that prioritize inspections based on key risk factors. HB 1560 also repealed provisions from several program statutes that conflicted with this new provision.

The proposed rules provide default procedures for any inspection the Department is authorized to conduct under law and are necessary to implement Texas Occupations Code §51.211. The proposed rules provide, among other things, that: (1) the department may perform inspections with or without advance notice to ensure compliance with statute or rule, or as a result of a complaint; (2) inspections will be performed during the regular operating hours of the location being inspected; (3) upon completion of an inspection, the license holder, applicant, or representative will be provided with the results of the inspection in writing; (4) the department may use alternative inspection methods, including the use of videoconference technology, instead of conducting an in-person inspection; and (5) a license holder, applicant, or other person must cooperate in the performance of an inspection. Different or more specific procedures may be provided in individual program rules.

SECTION-BY-SECTION SUMMARY

The proposed rules create new §60.220 within Chapter 60, Subchapter H. Proposed §60.220 simply states that the Department shall conduct inspections as provided by Occupations Code §51.211 and §51.351, Chapter 60, and the statutes and rules applicable to the agency's regulatory programs.

The proposed rules also create new §60.221 within Chapter 60, Subchapter H. Section 60.221 includes the default procedures to be used for inspections performed by the Department. Notably, all of the provisions included in §60.221 were drawn from existing program rules including the Department's Driver Education and Safety, Barbering, Cosmetologists, Massage Therapy, Orthotists and Prosthetists, Vehicle Towing and Booting, Vehicle Storage Facilities, and Used Automotive Parts Recyclers programs.

Subsection (a) states that §60.221 applies to any inspection the Department is authorized to conduct pursuant to law. Subsection (b) states that the Department may conduct inspections with or without advance notice to ensure compliance with statute or rule, or as a result of a complaint. Subsection (c) states that inspections will be conducted during the normal operating hours of the location being inspected. Subsection (d) requires the Department to provide a license holder, applicant, or representative thereof a written inspection report.

Subsection (e) of proposed new §60.221 provides that when an inspection report requires corrective action on the part of the license holder or applicant, the Department will provide the license holder, applicant, or representative a list of any required corrective actions and a timeline for completing each. Subsection (e) also provides that the license holder or applicant must complete any required corrective actions within the time period specified by the Department, and that the Department may grant extensions to this time period at its discretion. Subsection (f) states that the Department may assess administrative penalties, administrative sanctions, or both against a license holder or applicant who fails to complete any required corrective actions within this time period.

Subsection (f) of proposed new §60.221 authorizes the Department to use alternative methods, including videoconference or similar technology, to conduct inspections remotely. Lastly, subsection (h) provides that more specific provisions regarding inspections in individual program statutes or rules will prevail over §60.221.

The proposed rules also create new §60.222, entitled "Cooperation with Inspections." Subsection (a) requires a license holder, applicant, or other person to cooperate with an authorized Department inspector during an inspection. Subsection (b) requires a license holder, applicant, or other person to provide a Department inspector with records, notices, or other documents requested by the inspector.

Subsection (c) of proposed new §60.222 prohibits a license holder, applicant, or other person from avoiding, refusing to permit, or failing to cooperate in a Department inspection; interfering with a Department inspection; or threatening or intimidating a Department inspector in connection with an inspection.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rules are in effect, enforcing or administering the proposed rules does not have foreseeable implications relating to costs or revenues of state or local governments.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rules will not affect a local economy. Thus, the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

PUBLIC BENEFITS

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, the public benefits will be more efficient use of department resources, more effective enforcement against repeat violators, and less disruption to businesses with a record of compliance.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules. Because the agency has determined that the proposed rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, are not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rules do not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. The proposed rules do not create or eliminate a government program.

2. Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rules do not require an increase or decrease in fees paid to the agency.

5. The proposed rules do not create a new regulation.

6. The proposed rules do expand, limit, or repeal an existing regulation. The proposed rules provide additional provisions prohibiting license holders, applicants, or other persons from failing to cooperate in a Department inspection, or threatening or intimidating an authorized inspector. The proposed rules also authorize the Department to use remote inspection technology.

7. The proposed rules do not increase or decrease the number of individuals subject to the rules' applicability.

8. The proposed rules do not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rules may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules; by facsimile to (512) 475-3032; or by mail to Shamica Wilson, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

STATUTORY AUTHORITY

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51, 455, 605, 2303, 2308, 2309, and Texas Education Code, Chapter 1001. No other statutes, articles, or codes are affected by the proposed rules.

§60.220.Conducting Inspections.

The department shall conduct inspections as provided by Texas Occupations Code §51.211 and §51.351, this chapter, and the statutes and rules applicable to the programs regulated by the commission and the department.

§60.221.Inspection Procedures.

(a) This section applies to any inspection the department is authorized to conduct pursuant to law.

(b) The department may conduct inspections with or without advance notice to ensure compliance with statute or rule, or as a result of a complaint.

(c) Inspections will be conducted during the normal operating hours of the location being inspected.

(d) Upon completion of an inspection, the license holder, applicant, or representative will be provided with the results of the inspection in writing. For inspections where violations are identified, the inspection report will list those violations and indicate, if applicable, any corrective actions required.

(e) When corrective actions are required, the inspector will provide the license holder, applicant, or representative a list of any required corrective actions and a time period for completing each corrective action. The license holder or applicant must complete all corrective actions and provide verification, in a manner prescribed by the department, within the specified time period. The department may grant an extension of time at its discretion.

(f) The department may assess administrative penalties, administrative sanctions, or both against a license holder or applicant who fails to complete any required corrective actions, or fails to verify completion of any required corrective actions, within the time period specified by the department.

(g) The department may use alternative inspection methods, including the use of videoconference technology or other methods, instead of conducting an in-person inspection.

(h) If any provision of this section conflicts with the statutes or rules regarding department inspections for a specific program, the program statute or rule will prevail over this section.

§60.222.Cooperation with Inspections.

(a) A license holder, applicant, or other person must cooperate in the performance of an inspection conducted by an inspector authorized by the commission or the department (authorized inspector).

(b) A license holder, applicant, or other person must make available to the authorized inspector all records, notices, and other documents requested by the authorized inspector.

(c) A license holder, applicant, or other person is prohibited from:

(1) avoiding, refusing to permit, or failing to cooperate in an inspection conducted by an authorized inspector;

(2) interfering with an inspection conducted by an authorized inspector; or

(3) threatening or intimidating an authorized inspector or other representative of the commission or the department in connection with an inspection.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203935

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


CHAPTER 84. DRIVER EDUCATION AND SAFETY

The Texas Department of Licensing and Regulation (Department) proposes amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 84, Subchapter I, §84.100 and §84.101; and repeals an existing rule at Subchapter I, §84.102, regarding the Driver Education and Safety program. These proposed changes are referred to as the "proposed rules."

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

The rules under 16 TAC, Chapter 84, implement Texas Education Code, Chapter 1001, Driver and Traffic Safety Education.

House Bill (HB) 1560, 87th Legislature, Regular Session (2021), the Sunset legislation for the Department, added new inspection provisions to Occupations Code, Chapter 51, the Department's enabling statute (see HB 1560, Article 1, Section 1.05). HB 1560 added new §51.211 to Chapter 51, requiring the department to conduct risk-based inspections that prioritize inspections based on key risk factors. HB 1560 also repealed provisions from several program statutes that conflicted with this new provision.

The proposed rules remove periodic inspections from the Driver Education and Safety program rules and are necessary to implement Texas Occupations Code §51.211.

SECTION-BY-SECTION SUMMARY

The proposed rules amend §84.100(a) to remove periodic inspection requirements and to add language stating that driver education providers (formerly referred to as "driver education schools") will be inspected in accordance with Chapter 51, Occupations Code, and new rules governing inspections within 16 TAC, Chapter 60, Subchapter H. The proposed rules also repeal subsections (b) through (d) of § 84.100, as that subject matter will be covered by the inspections rules contained in Chapter 60, Subchapter H. In light of the repeal of subsections (b) through (d), current subsection (e) is being changed to (b).

The proposed rules amend §84.101 to change references to "school" to "provider" in subsections (a) and (b), and to repeal subsections (d) through (f), as that subject matter will be covered by the inspections rules contained in Chapter 60, Subchapter H.

Lastly, the proposed rules repeal §84.102 in its entirety. Section 84.102 requires annual inspections of driver education providers, and repealing this section is necessary to implement §51.211, Occupations Code.

The new rules regarding inspections under Chapter 60, Subchapter H, are also currently being proposed separately in this issue of the Texas Register. Those proposed rules provide, among other things, that: (1) the department may perform inspections with or without advance notice to ensure compliance with statute or rule, or as a result of a complaint; (2) inspections will be performed during the regular operating hours of the location being inspected; (3) upon completion of an inspection, the license holder, applicant, or representative will be provided with the results of the inspection in writing; (4) the department may use alternative inspection methods, including the use of videoconference technology, instead of conducting an in-person inspection; and (5) a license holder, applicant, or other person must cooperate in the performance of an inspection.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rules are in effect, enforcing or administering the proposed rules does not have foreseeable implications relating to costs or revenues of state or local governments.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rules will not affect a local economy. Thus, the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

PUBLIC BENEFITS

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, the public benefits will be more efficient use of department resources, more effective enforcement against repeat violators, and less disruption to businesses with a record of compliance.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules. Because the agency has determined that the proposed rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, are not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rules do not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. The proposed rules do not create or eliminate a government program.

2. Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rules do not require an increase or decrease in fees paid to the agency.

5. The proposed rules do not create a new regulation.

6. The proposed rules do expand, limit, or repeal an existing regulation. The proposed rules repeal rules that require periodic inspections or that would be redundant in light of the new rules within 16 T.A.C., Chapter 60, Subchapter H, governing inspections.

7. The proposed rules do not increase or decrease the number of individuals subject to the rules' applicability.

8. The proposed rules do not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rules may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules; by facsimile to (512) 475-3032; or by mail to Shamica Mason, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

SUBCHAPTER I. INSPECTIONS

16 TAC §84.100, §84.101

STATUTORY AUTHORITY

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapter 51, and Texas Education Code, Chapter 1001. No other statutes, articles, or codes are affected by the proposed repeal.

§84.100.Inspections--General.

(a) Driver education [Education] providers [schools] shall be inspected in accordance with Texas Occupations Code, Chapter 51, and the inspection rules under 16 Texas Administrative Code, Chapter 60, Subchapter H [periodically, or as a result of a complaint. These inspections will be performed to determine compliance with the requirements of the Code and this chapter].

[(b) Inspections shall be performed during the normal operating hours of the driver education school. Except for initial inspections of driver education schools, the department may conduct inspections under the Act and this chapter without advance notice.]

[(c) The department inspector will contact the driver education school owner, manager, or their representative upon arrival at the school, and before proceeding with the inspection.]

[(d) The driver education school owner, manager, or representative shall cooperate with the inspector in the performance of the inspection.]

(b) [(e)] A driver [Driver] education provider [schools] shall display a copy of the establishment's most recent inspection report issued by the department in a common area, lobby or hallway location within the building in which the provider [school] is located and accessible to the public without assistance or permission during all hours in which the provider [school] is in operation.

§84.101.Initial Inspections--Inspection of Driver Education Providers [Schools] Before Operation.

(a) Any new or relocated driver education provider [school] must be inspected and approved by the department before it may operate. Additionally, a driver education provider [school] that has changed ownership must be inspected and approved by the department, but may continue to operate prior to inspection.

(b) The driver education provider [school] owner shall request an initial inspection from the department.

(c) (No change.)

[(d) Upon completion of the initial inspection, the owner shall be advised in writing of the results. The inspection report must indicate whether the driver education school meets or does not meet the minimum requirements of the Code and this chapter.]

[(e) For driver education schools that do not meet the minimum requirements, the report will reflect those minimum requirements that remain to be addressed and corrected by the owner, and a timeline for the corrections to be made.]

[(f) A driver education school that does not meet the minimum requirements on initial inspection must be re-inspected. The driver education school owner must submit the request for re-inspection before the department will perform the re-inspection].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203937

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


16 TAC §84.102

STATUTORY AUTHORITY

The statutory provisions affected by the proposed repeal are those set forth in Texas Occupations Code, Chapter 51, and Texas Education Code, Chapter 1001. No other statutes, articles, or codes are affected by the proposed repeal.

§84.102.Periodic Inspections.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203938

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


CHAPTER 85. VEHICLE STORAGE FACILITIES

The Texas Department of Licensing and Regulation (Department) proposes amendments to an existing rule at 16 Texas Administrative Code (TAC), Chapter 85, §85.450; and repeals existing rules at §85.451 and §85.453, regarding the Vehicle Storage Facilities program. These proposed changes are referred to as the "proposed rules."

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

The rules under 16 TAC, Chapter 85, implement Texas Occupations Chapter 2303, Vehicle Storage Facility Act.

House Bill (HB) 1560, 87th Legislature, Regular Session (2021), the Sunset legislation for the Department, added new inspection provisions to Occupations Code, Chapter 51, the Department's enabling statute (see HB 1560, Article 1, Section 1.05). HB 1560 added new §51.211 to Chapter 51, requiring the department to conduct risk-based inspections that prioritize inspections based on key risk factors. HB 1560 also repealed provisions from several program statutes that conflicted with this new provision.

The proposed rules remove periodic inspections from the Vehicle Storage Facility program rules and are necessary to implement Texas Occupations Code §51.211.

SECTION-BY-SECTION SUMMARY

The proposed rules amend §85.450(a) to remove periodic inspection requirements and to add language stating that towing companies will be inspected in accordance with Chapter 51, Occupations Code, and new rules governing inspections within 16 TAC, Chapter 60, Subchapter H. Additionally, the last sentence of subsection (a) has been moved into new subsection (b).

The proposed rules also repeal subsections (b) through (d) of §85.450, as that subject matter will be covered by the inspections rules contained in Chapter 60, Subchapter H.

The proposed rules also repeal §85.451 and §85.453 in their entirety to remove periodic inspection requirements and to remove concepts that will be covered by the inspections rules contained in Chapter 60, Subchapter H. Repealing these sections is necessary to implement §51.211, Occupations Code.

The new rules regarding inspections under Chapter 60, Subchapter H, are also currently being proposed separately in this issue of the Texas Register. Those proposed rules provide, among other things, that: (1) the department may perform inspections with or without advance notice to ensure compliance with statute or rule, or as a result of a complaint; (2) inspections will be performed during the regular operating hours of the location being inspected; (3) upon completion of an inspection, the license holder, applicant, or representative will be provided with the results of the inspection in writing; (4) the department may use alternative inspection methods, including the use of videoconference technology, instead of conducting an in-person inspection; and (5) a license holder, applicant, or other person must cooperate in the performance of an inspection

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rules are in effect, enforcing or administering the proposed rules does not have foreseeable implications relating to costs or revenues of state or local governments.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rules will not affect a local economy. Thus, the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

PUBLIC BENEFITS

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, the public benefits will be more efficient use of department resources, more effective enforcement against repeat violators, and less disruption to businesses with a record of compliance.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules. Because the agency has determined that the proposed rule will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, are not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rules do not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. The proposed rules do not create or eliminate a government program.

2. Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rules do not require an increase or decrease in fees paid to the agency.

5. The proposed rules do not create a new regulation.

6. The proposed rules do expand, limit, or repeal an existing regulation. The proposed rules repeal rules that require periodic inspections or that would be redundant in light of the new rules within 16 TAC Chapter 60, Subchapter H, governing inspections.

7. The proposed rules do not increase or decrease the number of individuals subject to the rules' applicability.

8. The proposed rules do not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rules may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules; by facsimile to (512) 475-3032; or by mail to Shamica Wilson, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

16 TAC §85.450

STATUTORY AUTHORITY

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51 and 2303. No other statutes, articles, or codes are affected by the proposed rules.

§85.450.Inspections General.

(a) Vehicle storage facilities shall be inspected in accordance with Texas Occupations Code, Chapter 51, and the inspection rules under 16 Texas Administrative Code, Chapter 60, Subchapter H.

[(a) All VSFs shall be inspected periodically or as a result of a complaint. These inspections will be performed to determine compliance with the requirements of the Act and these rules. In addition, the department may make information available to VSF owners and managers on best practices for risk-reduction techniques.]

(b) The department may make information available to licensees and managers regarding best practices for risk-reduction techniques.

[(b) Inspections shall be performed during the normal operating hours of the VSF. The department may conduct inspections under the Act and these rules with or without advance notice.]

[(c) The department inspector will contact the VSF owner, manager, or representative upon arrival at the VSF, and before proceeding with the inspection.]

[(d) The VSF owner, manager, or representative shall cooperate with the inspector in the performance of the inspection.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203951

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


16 TAC §85.451, §85.453

STATUTORY AUTHORITY

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51 and 2303. No other statutes, articles, or codes are affected by the proposed rules.

§85.451.Periodic Inspections.

§85.453.Corrective Actions Following Inspection.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203952

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


CHAPTER 86. VEHICLE TOWING AND BOOTING

The Texas Department of Licensing and Regulation (Department) proposes amendments to an existing rule at 16 Texas Administrative Code (TAC), Chapter 86, §86.450; and repeals existing rules at §86.451 and §86.453, regarding the Vehicle Towing and Booting program. These proposed changes are referred to as the "proposed rules."

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

The rules under 16 TAC, Chapter 86, implement Texas Occupations Code, Chapter 2308, Vehicle Towing and Booting.

House Bill (HB) 1560, 87th Legislature, Regular Session (2021), the Sunset legislation for the Department, added new inspection provisions to Occupations Code, Chapter 51, the Department's enabling statute (see HB 1560, Article 1, Section 1.05). HB 1560 added new §51.211 to Chapter 51, requiring the department to conduct risk-based inspections that prioritize inspections based on key risk factors. HB 1560 also repealed provisions from several program statutes that conflicted with this new provision.

The proposed rules remove periodic inspections from the Vehicle Towing and Booting program rules and are necessary to implement Texas Occupations Code §51.211.

SECTION-BY-SECTION SUMMARY

The proposed rules amend §86.450(a) to remove periodic inspection requirements and to add language stating that towing companies will be inspected in accordance with Chapter 51, Occupations Code, and new rules governing inspections within 16 TAC, Chapter 60, Subchapter H. Additionally, the last sentence of subsection (a) has been moved into new subsection (b).

The proposed rules also repeal subsections (b) through (d) of §86.450, as that subject matter will be covered by the inspections rules contained in Chapter 60, Subchapter H.

The proposed rules also repeal §86.451 and §86.453 in their entirety to remove periodic inspection requirements and to remove concepts that will be covered by the inspections rules contained in Chapter 60, Subchapter H. Repealing these sections is necessary to implement §51.211, Occupations Code.

The new rules regarding inspections under Chapter 60, Subchapter H, are also currently being proposed separately in this issue of the Texas Register. Those proposed rules provide, among other things, that: (1) the department may perform inspections with or without advance notice to ensure compliance with statute or rule, or as a result of a complaint; (2) inspections will be performed during the regular operating hours of the location being inspected; (3) upon completion of an inspection, the license holder, applicant, or representative will be provided with the results of the inspection in writing; (4) the department may use alternative inspection methods, including the use of videoconference technology, instead of conducting an in-person inspection; and (5) a license holder, applicant, or other person must cooperate in the performance of an inspection.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rules are in effect, enforcing or administering the proposed rules does not have foreseeable implications relating to costs or revenues of state or local governments.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rules will not affect a local economy. Thus, the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

PUBLIC BENEFITS

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, the public benefits will be more efficient use of department resources, more effective enforcement against repeat violators, and less disruption to businesses with a record of compliance.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules. Because the agency has determined that the proposed rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, are not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rules do not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. The proposed rules do not create or eliminate a government program.

2. Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rules do not require an increase or decrease in fees paid to the agency.

5. The proposed rules do not create a new regulation.

6. The proposed rules do expand, limit, or repeal an existing regulation. The proposed rules repeal rules that require periodic inspections or that would be redundant in light of the new rules within 16 TAC, Chapter 60, Subchapter H, governing inspections.

7. The proposed rules do not increase or decrease the number of individuals subject to the rules' applicability.

8. The proposed rules do not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rules may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules; by facsimile to (512) 475-3032; or by mail to Shamica Wilson, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

16 TAC §86.450

STATUTORY AUTHORITY

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51 and 2308.

No other statutes, articles, or codes are affected by the proposed rules.

§86.450.Inspections--General.

(a) Towing companies [A towing company] shall be inspected in accordance with Texas Occupations Code, Chapter 51, and the inspection rules under 16 Texas Administrative Code, Chapter 60, Subchapter H [periodically or as a result of a complaint. These inspections are performed to determine compliance with the requirements of the Act and these rules. In addition, the department may make information available to licensees and managers on best practices for risk-reduction techniques].

(b) The department may make information available to licensees and managers regarding best practices for risk-reduction techniques.

[(b) The towing company owner, manager, or [their] representative must, upon request, make available to the inspector all records, notices and other documents required by these rules.]

[(c) Upon completion of the inspection, the owner manager, or representative shall be advised in writing of the results of the inspection. The inspection report will indicate whether the inspection was approved or not approved, and will describe any violations identified during the inspection.]

[(d) For inspections that are not approved, the inspection report will identify violations that must be corrected by the owner. The report will also indicate the corrective actions required to address the violations, in accordance with §86.453. Additionally, the department may assess administrative penalties and/or administrative sanctions for violations.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203947

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


16 TAC §86.451, §86.453

STATUTORY AUTHORITY

The statutory provisions affected by the proposed repeals are those set forth in Texas Occupations Code, Chapters 51 and 2308.

No other statutes, articles, or codes are affected by the proposed repeals.

§86.451.Periodic Inspections.

§86.453.Corrective Actions Following Inspection.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203948

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


CHAPTER 87. USED AUTOMOTIVE PARTS RECYCLERS

The Texas Department of Licensing and Regulation (Department) proposes amendments to an existing rule at 16 Texas Administrative Code (TAC), Chapter 87, §87.44; and repeals existing rules at §87.45 and §87.47, regarding the Used Automotive Parts Recyclers program. These proposed changes are referred to as the "proposed rules."

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

The rules under 16 TAC, Chapter 87, implement Texas Occupations Code, Chapter 2309, Used Automotive Parts Recyclers program.

House Bill (HB) 1560, 87th Legislature, Regular Session (2021), the Sunset legislation for the Department, added new inspection provisions to Occupations Code, Chapter 51, the Department's enabling statute (see HB 1560, Article 1, Section 1.05). HB 1560 added new §51.211 to Chapter 51, requiring the department to conduct risk-based inspections that prioritize inspections based on key risk factors. HB 1560 also repealed provisions from several program statutes that conflicted with this new provision.

The proposed rules remove periodic inspections from the Used Automotive Parts Recyclers program rules and are necessary to implement Texas Occupations Code §51.211.

SECTION-BY-SECTION SUMMARY

The proposed rules amend §87.44 to remove periodic inspection requirements and to add language stating that used automotive parts recycling businesses will be inspected in accordance with Chapter 51, Occupations Code, and new rules governing inspections within 16 TAC, Chapter 60, Subchapter H. Additionally, the last sentence of subsection (a) has been moved into new subsection (b).

The proposed rules also repeal subsections (b) through (d) of §87.44, as that subject matter will be covered by the inspections rules contained in Chapter 60, Subchapter H.

The proposed rules also repeal §87.45 and §87.47 in their entirety to remove periodic inspection requirements and to remove concepts that will be covered by the inspections rules contained in Chapter 60, Subchapter H. Repealing these sections is necessary to implement §51.211, Occupations Code.

The new rules regarding inspections under Chapter 60, Subchapter H, are also currently being proposed separately in this issue of the Texas Register. Those proposed rules provide, among other things, that: (1) the department may perform inspections with or without advance notice to ensure compliance with statute or rule, or as a result of a complaint; (2) inspections will be performed during the regular operating hours of the location being inspected; (3) upon completion of an inspection, the license holder, applicant, or representative will be provided with the results of the inspection in writing; (4) the department may use alternative inspection methods, including the use of videoconference technology, instead of conducting an in-person inspection; and (5) a license holder, applicant, or other person must cooperate in the performance of an inspection.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rules are in effect, enforcing or administering the proposed rules does not have foreseeable implications relating to costs or revenues of state or local governments.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rules will not affect a local economy. Thus, the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

PUBLIC BENEFITS

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, the public benefits will be more efficient use of department resources, more effective enforcement against repeat violators, and less disruption to businesses with a record of compliance.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules. Because the agency has determined that the proposed rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, are not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rules do not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. The proposed rules do not create or eliminate a government program.

2. Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rules do not require an increase or decrease in fees paid to the agency.

5. The proposed rules do not create a new regulation.

6. The proposed rules do expand, limit, or repeal an existing regulation. The proposed rules repeal rules that require periodic inspections or that would be redundant in light of the new rules within 16 T.A.C., Chapter 60, Subchapter H, governing inspections.

7. The proposed rules do not increase or decrease the number of individuals subject to the rules' applicability.

8. The proposed rules do not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rules may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules; by facsimile to (512) 475-3032; or by mail to Shamica Wilson, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

16 TAC §87.44

STATUTORY AUTHORITY

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51 and 2309. No other statutes, articles, or codes are affected by the proposed rules.

§87.44.Inspections--General.

(a) Used [All used] automotive parts recycling businesses shall be inspected in accordance with Texas Occupations Code, Chapter 51, and the inspection rules under 16 Texas Administrative Code, Chapter 60, Subchapter H [periodically, or as a result of a complaint. These inspections will be performed to determine compliance with the requirements of the Act and this chapter. In addition, the department may make information available to used automotive parts recycling business owners and managers on best practices for risk-reduction techniques].

(b) The department may make information available to used automotive parts recycling business owners and managers regarding best practices for risk-reduction techniques.

[(b) Inspections shall be performed during the normal operating hours of the used automotive parts recycling business. The department may conduct inspections under the Act and this chapter with or without advance notice.]

[(c) The department inspector will contact the licensee, manager, or representative upon arrival at the facility location, and before proceeding with the inspection.]

[(d) The licensee, manager, or representative shall cooperate with the inspector in the performance of the inspection.]

[(e) Periodic inspections under this section are in addition to any complaint based inspections and those inspections do not restrict the department's right to enter the licensed facility for purposes of enforcement and compliance.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203949

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


16 TAC §87.45, §87.47

STATUTORY AUTHORITY

The statutory provisions affected by the proposed repeals are those set forth in Texas Occupations Code, Chapters 51 and 2309. No other statutes, articles, or codes are affected by the proposed repeals.

§87.45.Inspections--Periodic.

§87.47.Corrective Actions Following Inspection.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203950

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


CHAPTER 114. ORTHOTISTS AND PROSTHETISTS

16 TAC §114.29

The Texas Department of Licensing and Regulation (Department) proposes amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 114, §114.29, regarding the Orthotists and Prosthetists program. These proposed changes are referred to as the "proposed rules."

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

The rules under 16 TAC, Chapter 114, implement Texas Occupations Code, Chapter 605, Orthotists and Prosthetists.

House Bill (HB) 1560, 87th Legislature, Regular Session (2021), the Sunset legislation for the Department, added new inspection provisions to Occupations Code, Chapter 51, the Department's enabling statute (see HB 1560, Article 1, Section 1.05). HB 1560 added new §51.211 to Chapter 51, requiring the department to conduct risk-based inspections that prioritize inspections based on key risk factors. HB 1560 also repealed provisions from several program statutes that conflicted with this new provision.

The proposed rules remove periodic inspections from the Orthotists and Prosthetists program rules and are necessary to implement Texas Occupations Code §51.211.

SECTION-BY-SECTION SUMMARY

The proposed rules amend §114.29(h) to remove periodic inspection requirements and to add language stating that facilities will be inspected in accordance with Chapter 51, Occupations Code, and new rules governing inspections within 16 TAC, Chapter 60, Subchapter H. The proposed rules also repeal former subsections (h)(1) through (h)(6) of §114.29, as that subject matter will be covered by the inspections rules contained in Chapter 60, Subchapter H.

The proposed rules also change the title of §114.29 to "Accreditation and Inspection of Facilities" (emphasis added).

The new rules regarding inspections under Chapter 60, Subchapter H, are also currently being proposed separately in this issue of the Texas Register. Those proposed rules provide, among other things, that: (1) the department may perform inspections with or without advance notice to ensure compliance with statute or rule, or as a result of a complaint; (2) inspections will be performed during the regular operating hours of the location being inspected; (3) upon completion of an inspection, the license holder, applicant, or representative will be provided with the results of the inspection in writing; (4) the department may use alternative inspection methods, including the use of videoconference technology, instead of conducting an in-person inspection; and (5) a license holder, applicant, or other person must cooperate in the performance of an inspection.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rules are in effect, enforcing or administering the proposed rules does not have foreseeable implications relating to costs or revenues of state or local governments.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rules will not affect a local economy. Thus, the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

PUBLIC BENEFITS

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, the public benefits will be more efficient use of department resources, more effective enforcement against repeat violators, and less disruption to businesses with a record of compliance.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules. Because the agency has determined that the proposed rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, are not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rules do not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. The proposed rules do not create or eliminate a government program.

2. Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rules do not require an increase or decrease in fees paid to the agency.

5. The proposed rules do not create a new regulation.

6. The proposed rules do expand, limit, or repeal an existing regulation. The proposed rules repeal rules that require periodic inspections or that would be redundant in light of the new rules within 16 T.A.C., Chapter 60, Subchapter H, governing inspections.

7. The proposed rules do not increase or decrease the number of individuals subject to the rules' applicability.

8. The proposed rules do not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rules may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules; by facsimile to (512) 475-3032; or by mail to Shamica Wilson, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

STATUTORY AUTHORITY

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51 and 605. No other statutes, articles, or codes are affected by the proposed rules.

§114.29.Accreditation and Inspection of Facilities.

(a) - (g) (No change.)

(h) Facilities shall be inspected in accordance with Texas Occupations Code, Chapter 51, and the inspection rules under 16 Texas Administrative Code, Chapter 60, Subchapter H.

[(h) Inspections.]

[(1) Inspections will be performed to determine compliance with the requirements of the Act and this chapter, particularly those requirements relating to public safety, licensing, and sanitation.]

[(2) Each accredited facility shall be inspected at least once every two years to verify compliance with the Act and this chapter.]

[(3) Facilities are subject to random inspection and inspection to investigate complaints.]

[(4) The department may conduct inspections under the Act and this chapter without advance notice.]

[(5) Inspections shall be performed during the hours of normal business operation of the facility. The department inspector will contact the facility practitioner in charge or other representative upon arrival at the facility, and before proceeding with the inspection.]

[(6) The facility practitioner in charge or representative shall cooperate with the inspector in the performance of the inspection].

(i) - (m) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203946

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


CHAPTER 117. MASSAGE THERAPY

The Texas Department of Licensing and Regulation (Department) proposes amendments to existing rules at 16 Texas Administrative Code (TAC), Chapter 117, Subchapter F, §117.55; and Subchapter G, §117.82, regarding the Massage Therapy program. These proposed changes are referred to as the "proposed rules."

EXPLANATION OF AND JUSTIFICATION FOR THE RULES

The rules under 16 TAC, Chapter 117, implement Texas Occupations Code, Chapter 455.

House Bill (HB) 1560, 87th Legislature, Regular Session (2021), the Sunset legislation for the Department, added new inspection provisions to Occupations Code, Chapter 51, the Department's enabling statute (see HB 1560, Article 1, Section 1.05). HB 1560 added new §51.211 to Chapter 51, requiring the department to conduct risk-based inspections that prioritize inspections based on key risk factors. HB 1560 also repealed provisions from several program statutes that conflicted with this new provision.

The proposed rules remove periodic inspections from the Massage Therapy program rules and are necessary to implement Texas Occupations Code §51.211.

SECTION-BY-SECTION SUMMARY

The proposed rules amend §117.55(a) to remove periodic inspection requirements and to add language stating that massage therapy schools will be inspected in accordance with Chapter 51, Occupations Code, and new rules governing inspections within 16 TAC, Chapter 60, Subchapter H.

The proposed rules repeal §117.55(b) and (d), as the concepts currently contained in those sections are contained in the global inspection provisions within 16 TAC, Chapter 60, Subchapter H. Accordingly, §117.55(c) has been re-designated as §117.55(b). Similarly, §117.55(e) has been re-designated as §117.55(c).

The proposed rules amend §117.82(f) to remove periodic inspection requirements and concepts that are included within the new rules governing inspections within 16 TAC, Chapter 60, Subchapter H.

The new rules regarding inspections under Chapter 60, Subchapter H, are also currently being proposed separately in this issue of the Texas Register. Those proposed rules provide, among other things, that: (1) the department may perform inspections with or without advance notice to ensure compliance with statute or rule, or as a result of a complaint; (2) inspections will be performed during the regular operating hours of the location being inspected; (3) upon completion of an inspection, the license holder, applicant, or representative will be provided with the results of the inspection in writing; (4) the department may use alternative inspection methods, including the use of videoconference technology, instead of conducting an in-person inspection; and (5) a license holder, applicant, or other person must cooperate in the performance of an inspection.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Tony Couvillon, Policy Research and Budget Analyst, has determined that for each year of the first five years the proposed rules are in effect, enforcing or administering the proposed rules does not have foreseeable implications relating to costs or revenues of state or local governments.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Couvillon has determined that the proposed rules will not affect a local economy. Thus, the agency is not required to prepare a local employment impact statement under Government Code §2001.022.

PUBLIC BENEFITS

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, the public benefits will be more efficient use of department resources, more effective enforcement against repeat violators, and less disruption to businesses with a record of compliance.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Couvillon has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules.

FISCAL IMPACT ON SMALL BUSINESSES, MICRO-BUSINESSES, AND RURAL COMMUNITIES

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules. Because the agency has determined that the proposed rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, are not required.

ONE-FOR-ONE REQUIREMENT FOR RULES WITH A FISCAL IMPACT

The proposed rules do not have a fiscal note that imposes a cost on regulated persons, including another state agency, a special district, or a local government. Therefore, the agency is not required to take any further action under Government Code §2001.0045.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. The proposed rules do not create or eliminate a government program.

2. Implementation of the proposed rules does not require the creation of new employee positions or the elimination of existing employee positions.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency.

4. The proposed rules do not require an increase or decrease in fees paid to the agency.

5. The proposed rules do not create a new regulation.

6. The proposed rules do expand, limit, or repeal an existing regulation. The proposed rules repeal rules that require periodic inspections or that would be redundant in light of the new rules within 16 T.A.C., Chapter 60, Subchapter H, governing inspections.

7. The proposed rules do not increase or decrease the number of individuals subject to the rules' applicability.

8. The proposed rules do not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

The Department has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Comments on the proposed rules may be submitted electronically on the Department's website at https://ga.tdlr.texas.gov:1443/form/gcerules; by facsimile to (512) 475-3032; or by mail to Shamica Wilson, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711. The deadline for comments is 30 days after publication in the Texas Register.

SUBCHAPTER F. LICENSED MASSAGE SCHOOLS

16 TAC §117.55

STATUTORY AUTHORITY

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51 and 455. No other statutes, articles, or codes are affected by the proposed rules.

§117.55.Massage School Inspections.

(a) Massage schools shall be inspected in accordance with Texas Occupations Code, Chapter 51, and the inspection rules under 16 Texas Administrative Code, Chapter 60, Subchapter H.

[(a) There will be at least one unannounced inspection at the primary instructional location of each massage school and at each additional location every year. The massage school owner or the designated contact person must be available.]

[(b) Other inspections may be performed, announced or unannounced, at the discretion of the department to ensure compliance.]

(b) [(c)] A school must maintain and make available for department or student inspection the following documents for a period of the student's enrollment through thirty-six (36) months after the student completes the curriculum, withdraws, or is terminated:

(1) daily record of attendance;

(2) the following documents if a time clock is used:

(A) time clock record(s); and

(B) time clock failure and repair record(s);

(3) for a student completing instruction through distance learning, all documentation required under §117.59(m); and

(4) all other relevant documents that account for a student's hours under this chapter.

[(d) Upon completion of the inspection, the owner shall be advised in writing of the results. The inspection report will indicate whether the inspection was approved or not approved and will describe any violations identified during the inspection. For inspections that are not approved, the inspection report will identify violations that must be corrected by the owner of the school within ten (10) days. Verification of corrected violations must be provided, in a manner prescribed by the department, within thirty (30) days of completion.]

(c) [(e)] The department may inspect a school's instruction, including observing or auditing any instruction offered through distance learning.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203943

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750


SUBCHAPTER G. LICENSED MASSAGE ESTABLISHMENTS

16 TAC §117.82

STATUTORY AUTHORITY

The statutory provisions affected by the proposed rules are those set forth in Texas Occupations Code, Chapters 51 and 455. No other statutes, articles, or codes are affected by the proposed rules.

§117.82.Massage Establishments--General Requirements.

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

(f) Massage establishments shall be inspected in accordance with Texas Occupations Code, Chapter 51, and the inspection rules under 16 Texas Administrative Code, Chapter 60, Subchapter H.

[(f) A massage establishment is subject to inspection to verify compliance with the Act and this chapter by authorized personnel of the department at any reasonable time.]

[(1) Massage establishments shall be inspected periodically and as a result of a complaint. These inspections will be performed to determine compliance with the requirements of the Act and this chapter.]

[(2) The department inspector will contact the establishment owner, manager, or their representative upon arrival at the establishment and before proceeding with the inspection.]

[(3) The establishment owner, manager, or their representative shall cooperate with the inspector in the performance of the inspection.]

[(4) Each establishment shall be inspected at least once every two years.]

[(5) Upon completion of the inspection, the owner, manager, or their representative shall be advised in writing of the results. The inspection report will list violations identified during the inspection.]

(g) - (k) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on September 30, 2022.

TRD-202203945

Brad Bowman

General Counsel

Texas Department of Licensing and Regulation

Earliest possible date of adoption: November 13, 2022

For further information, please call: (512) 463-7750