She should not be allowed to compete period. The performance enhancing drugs should disqualify.So Texas is one of seven states, the others being Idaho, Nebraska, Indiana, Alabama, Kentucky and North Carolina, that classify a person's gender based on the sex listed on their birth certificate.
In order for a student to compete in the other sex's sport, or the one that they "identify" themselves as, they are required to have a birth certificate change or surgery.
The other 43 state policies operate on a case-by-case basis.
source: the Washington Post
Edit: I agree that in order for someone to identify themselves as a different sex, it should be a requirement to show that on some sort of legal document or birth certificate. However, in this case, she, he, or it, should not have been allowed to compete with other girls, regardless of what is on its birth certificate.