Unlike second edition, 3.5rd edition assumes that the amount of wealth a player character has (and thus the quantity and power of magic items they have access to) is an important part of game balance. The apparent purpose and function of these rules in second editon was to reduce the rate at which new spells were introduced to the game, thereby reducing the amount of effort and adaptability required of the GM. They're largely based on the second edition's rules for creating new spells, with the exception of cost: In second edition, the cost of researching a new spell was between 1 gp per spell level, with the guideline that the GM should set the actual price high enough that the actual amount should be close to, but not in excess of, the researching PC's available wealth. There are potential problems with these rules It is therefore wise to consider them carefully before using them. Information migrated from GMJoe's comments: The section includes a table with recommended damage caps for Arcane and Divine spells by level. For the most part, they recommend comparing the new spell with existing spells to determine the level, but there is also advice about certain effects, costs, etc. The guidelines are very good, in my opinion, but require a lot of DM discretion. The rest of the text is devoted to guidelines for judging level, power, duration, etc.

The text notes that creating spells is easy. Spellcraft check of 10 + level of spell means the character was successful.Access to a library, just as if the character were researching to learn a spell.On p42 and pp95-96 of the 3e DMG (and p198 of the 3.5 DMG) there are rules and guidelines for creating new spells.

Megamud setup for new spells?