TITLE 43. TRANSPORTATION

PART 1. TEXAS DEPARTMENT OF TRANSPORTATION

CHAPTER 7. RAIL FACILITIES

The Texas Department of Transportation (department) proposes the repeal of Subchapter E, §§7.80 - 7.88, and the simultaneous adoption of new Subchapter E, §§7.80 - 7.95 concerning the department's safety oversight of rail fixed guideway systems.

EXPLANATION OF PROPOSED REPEALS AND NEW SECTIONS

Senate Bill 1523, 85th Legislature, Regular Session, 2017, (SB 1523) requires the department to create a state safety oversight program for rail fixed guideway public transportation systems. The legislation also aligns Texas law with federal state safety oversight requirements of 49 U.S.C. Section 5329(e), as amended by the Moving Ahead for Progress in the 21st Century Act (MAP-21), 49 C.F.R. Part 674.

New Subchapter E implements SB 1523 and 49 C.F.R. Part 674, and makes general changes and updates to the existing State Safety Oversight Program. The department has been responsible for the State Safety Oversight program since 1996. SB 1523 expands the department's authority by providing more enforcement responsibilities to comply with the changes in the federal regulations. The federal requirements must be implemented by March 2019 and these rules are necessary to meet that obligation. Failure to comply with 49 C.F.R. §674 could result in the loss of federal transit funding, including funds disbursed directly to the local transit agencies.

New §7.80, Purpose, states that the purpose of these rules is establishing the standards for the state oversight of the safety practices of rail fixed guideway systems as required by 49 C.F.R. §5330. This is a reinstatement of the current §7.80 with minor non-substantive changes.

New §7.81, Definitions, is a restatement of many of the definitions used in the existing §7.81 without substantive changes. However, definitions of "hazard," "incident," "investigation," "pre-revenue operations," "rail fixed guideway public transportation system," "rail transit agency," and "revenue service" have been added or modified to be consistent with the definitions in 49 C.F.R. §674 and federal guidance on State Safety Oversight.

New §7.82, System Safety Program Plan, is the language of existing §7.82, Program Standard, with only non-substantive changes. The language continues to track the federal requirements for a system safety program plan.

New §7.83, Hazard Management Process, is the language of existing §7.83 System Safety Program Plan regarding the hazard management process with the addition of a new hazard reporting requirement as required by the new federal regulations.

New §7.84, New State Rail Transit Agency Responsibilities, provides that a new rail transit system may not begin pre-revenue operations until the state approves the agency's system safety program plan (SSPP) in accordance with the federal requirements. This section also provides specific time lines for the submission and approval of the SSPP.

New §7.85, Modifications to a System Safety Program Plan, provides guidance for modifying an existing transit agency SSPP. The section requires a new plan to be approved prior to implementation unless the transit agency believes the modification is necessary to address an imminent safety hazard. These provisions are needed for compliance with the federal requirements.

New §7.86, Rail Transit Agency's Annual Review, primarily reinstates the requirements of existing §7.85. The section provides that the state may participate in or observe the agency's internal review. It also establishes December 1st as the date for an annual internal safety review submission to the state, a change from the current February 1 deadline. This is necessary due to the federal requirement for the state to submit an accurate report to the Federal Transit Administration (FTA) by March 15 each year. The department has found that the current timeline does not provide sufficient time for the department to prepare the required federal report.

New §7.87, Department System Safety Program Plan Audit, provides guidance on the department's audit procedures. The new section includes details on the required elements of the SSPP audit, the department's checklist procedures and time lines to coordinate with the agency and conduct the audit, details on the draft and final report process, and necessary corrective actions. The new guidance provides the transit agencies with the information needed to prepare for the department's audit and provide for a smoother process.

New §7.88, Accident Notification, revises the elements of the accident notification requirements based on new federal requirements and a pending update to the department's web-based notification and tracking system. The new section provides for the various reporting deadlines as required under 49 C.F.R. §674. The federal regulations require a 2-hour or 30-day notification for most accidents, depending on the level of severity or the type of incident. The new section details which accidents must be reported within 2 hours and those that must be reported within 30 days and mirrors the federal requirements. The section requires a transit agency to track other accidents and events that do not require reporting and to make that information available on request. The section also requires the agencies to notify the department in a format specified by the department to accommodate the transition from a manual, paper-based notification system to an online, web-based electronic system that is currently in the procurement process. This will allow the department the ability to change to the more efficient system without requiring a change to the rules.

New §7.89, Accident Investigations, describes the department's requirements for accident investigations in accordance with FTA and National Transportation Safety Board regulations. It also provides department discretion in authorizing an agency to conduct its own investigation provided that personnel meet federal qualifications. This section specifies the time line for submitting investigation reports and provides that the department may conduct an accident investigation in specified circumstances.

New §7.90, Corrective Action Plan, includes language that is in existing §7.86, Accident Notification and Corrective Action Plans. Language is added to commit the department to reviewing a Corrective Action Plan (CAP) submitted by an agency within 30 days of receipt and requires an agency to submit CAPs every 30 days until compliance is achieved. New language also provides that failure to complete a CAP is a violation of this chapter. The new language is needed to strengthen the department's enforcement responsibilities as required under the new federal regulations.

New §7.91, Administrative Actions by the Department, ensures that the department has investigative and enforcement authority. The new federal regulations require the department enforce the federal requirements. The administrative process outlined in this section lays out the process the department has selected to enforce compliance with the program requirements. The section provides that the department will notify the transit agency of any violations and the needed compliance action and that the transit agency has 45 days to comply with the notification or to request administrative review.

New §7.92, Administrative Review, provides the process for an agency to challenge the department's decision on a CAP under §7.90 or an administrative actions under §7.91. The section provides for a review by the department's executive director or designee if the request is submitted in writing within 45 days of receipt of the violation notification. The department will make the final determination within 60 days of the review request and that failing to comply with the final determination could result in the rescission of the SSPP. The department's determination is final and enforceable by rescinding the agency's approved SSPP which may lead to petitioning a court to halt the operation of the agency's rail service. This new language is needed to establish an enforcement process as required by the federal regulations.

New §7.93, Escalation of Enforcement Action, describes the process that the department will use if an agency fails to comply with an administrative action notification. The section allows the department to escalate the issue to the transit agency's governing body to resolve safety issues before petitioning a court to halt the operation of an agency's rail service. This language is necessary to address problems with a transit agency that is not responding to the department's enforcement actions.

New §7.94, Emergency Order to Address Imminent Public Safety Concerns, describes the conditions under which the department may address imminent safety concerns that a rail transit agency is unable to eliminate. The department's executive director will rescind approval of the agency's SSPP and order the agency to cease all operations until the immediate threat is eliminated. If the agency fails to halt operations, the department may seek a temporary injunction. This new language is needed to make it clear that the department can take immediate action if continued operations create an imminent safety threat to the public.

New §7.95, Admissibility; Use of Information, is a restatement of existing §7.88 with no substantive changes.

FISCAL NOTE

Brian Ragland, Chief Financial Officer, has determined that for each of the first five years in which the proposed rules are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the rules. Although some new reporting periods have been established the reporting requirements stem from federal regulations and are not new requirements on the local transit agencies.

Eric Gleason, Director, Public Transportation Division, has determined that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the repeals and new sections.

PUBLIC BENEFIT AND COST

Mr. Gleason has also determined that for each of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing or administering these rules will be a greater clarity and organization of the department's operation of the State Safety Oversight Program. There are no anticipated economic costs for persons required to comply with the proposed rules. There will be no adverse economic effect on small businesses or a municipality with a population of less than 25,000 and therefor, an economic impact statement and regulatory flexibility analysis are not required under Government Code, §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

Mr. Gleason has determined that for the first five years in which the proposed rules are in effect the enforcement authority of the state's Safety Oversight Program will be expanded to comply with Federal Transit Agency requirements. Mr. Gleason has also considered the requirements of Government Code, §2001.0221 and has determined that for the first five years in which the proposed rules are in effect, there is no impact on the growth of state government.

PUBLIC HEARING

Pursuant to the Administrative Procedure Act, Government Code, Chapter 2001, the Texas Department of Transportation will conduct a public hearing to receive comments concerning the proposed rules. The public hearing will be held at 10:00 a.m. on February 27, 2018, in the Ric Williamson Hearing Room, First Floor, Dewitt C. Greer State Highway Building, 125 East 11th Street, Austin, Texas and will be conducted in accordance with the procedures specified in 43 TAC §1.5. Those desiring to make comments or presentations may register starting at 8:30 a.m. Any interested persons may appear and offer comments, either orally or in writing; however, questioning of those making presentations will be reserved exclusively to the presiding officer as may be necessary to ensure a complete record. While any person with pertinent comments will be granted an opportunity to present them during the course of the hearing, the presiding officer reserves the right to restrict testimony in terms of time and repetitive content. Organizations, associations, or groups are encouraged to present their commonly held views and identical or similar comments through a representative member when possible. Comments on the proposed text should include appropriate citations to sections, subsections, paragraphs, etc. for proper reference. Any suggestions or requests for alternative language or other revisions to the proposed text should be submitted in written form. Presentations must remain pertinent to the issues being discussed. A person may not assign a portion of his or her time to another speaker. Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services such as interpreters for persons who are deaf or hearing impaired, readers, large print or Braille, are requested to contact the General Counsel Division, 125 East 11th Street, Austin, Texas 78701-2483, (512) 463-8630 at least five working days before the date of the hearing so that appropriate services can be provided.

SUBMITTAL OF COMMENTS

Written comments on the repeal of §§7.80 - 7.88 and adoption of new §§7.80 - 7.95 may be submitted to Rule Comments, General Counsel Division, Texas Department of Transportation, 125 East 11th Street, Austin, Texas 78701-2483 or to RuleComments@txdot.gov with the subject line "State Safety Oversight Program." The deadline for receipt of comments is 5:00 p.m. on March 12, 2018. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed amendments, or is an employee of the department.

SUBCHAPTER E. RAIL FIXED GUIDEWAY SYSTEM STATE SAFETY OVERSIGHT PROGRAM

43 TAC §§7.80 - 7.88

STATUTORY AUTHORITY

The repeals are proposed under Transportation Code, §201.101, which provides the commission with the authority to establish rules for the conduct of the work of the department, and more specifically Transportation Code, §455.060, which authorizes the commission to adopt rules for the oversight of rail fixed guideway systems.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapter 455, Subchapter B.

§7.80.Purpose.

§7.81.Definitions.

§7.82.Program Standard.

§7.83.System Safety Program Plan.

§7.84.System Security Plan.

§7.85.Reviews.

§7.86.Accident Notification and Corrective Action Plans.

§7.87.Deadlines.

§7.88.Admissibility; Use of Information.

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 January 25, 2018.

TRD-201800312

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: March 11, 2018

For further information, please call: (512) 463-8630


43 TAC §§7.80 - 7.95

STATUTORY AUTHORITY

The new sections are proposed under Transportation Code, §201.101, which provides the commission with the authority to establish rules for the conduct of the work of the department, and more specifically Transportation Code, §455.060, which authorizes the commission to adopt rules for the oversight of rail fixed guideway systems.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapter 455, Subchapter B.

§7.80.Purpose.

Transportation Code, Chapter 455 requires the Texas Transportation Commission to establish standards for and implement state oversight of safety practices of rail fixed guideway systems in compliance with 49 U.S.C. §5330. This subchapter prescribes the policies and procedures governing state oversight of rail fixed guideway systems' safety practices.

§7.81.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Department--The Texas Department of Transportation.

(2) Executive director--The executive director of the department.

(3) Fatality--A death that results from an incident and that occurs within 30 days after the date of the incident.

(4) FTA--The Federal Transit Administration, an agency of the United States Department of Transportation.

(5) Hazard--Any real or potential condition that can cause injury, illness, or death; damage to or loss of the facilities, equipment, rolling stock, or infrastructure of a rail fixed guideway public transportation system; or damage to the environment.

(6) Incident--An event that involves any of the following: A personal injury that is not a serious injury; one or more injuries requiring medical transport; or damage to facilities, equipment, rolling stock, or infrastructure that disrupts the operations of a rail transit agency.

(7) Injury--Any physical damage or harm that occurs to an individual as a result of an incident and that requires immediate medical attention away from the scene.

(8) Investigation--The process of determining the causal and contributing factors of an accident, incident, or hazard, for the purpose of preventing recurrence and mitigating risk.

(9) Passenger--An individual who is on board, boarding, or alighting from a rail transit vehicle used for the individual's travel.

(10) Pre-revenue Operations--Operation of the rail fixed guideway public transportation system prior to revenue service that includes identification and performance of tests, drills, exercises, and audits designed to verify the functional capability and readiness of the system.

(11) Rail fixed guideway public transportation system--Any fixed guideway system that uses rail, is operated for public transportation, is within the jurisdiction of a State, and is not subject to the jurisdiction of the Federal Railroad Administration, or any such system in engineering or construction. Rail fixed guideway public transportation systems include but are not limited to rapid rail, heavy rail, light rail, monorail, trolley, inclined plane, funicular, and automated guideway.

(12) Rail transit agency--Any entity that provides services on a rail fixed guideway public transportation system.

(13) Rail transit controlled property--Property that is used by the rail transit agency.

(14) Rail transit vehicle--The rail transit agency's rolling stock, including passenger and maintenance vehicles.

(15) Revenue Service--Operation of the rail fixed guideway public transportation system to carry passengers that pay fares, provide payment through a contractual arrangement, or have the fares subsidized by public policy. Vehicles operated in fare free service are considered in revenue service.

§7.82.System Safety Program Plan.

(a) Each rail transit agency shall develop and implement a written system safety program plan that complies with the requirements of this section.

(b) The system safety program plan must include, at a minimum:

(1) a policy statement, signed by the agency's chief executive, that endorses the safety program and describes the authority that establishes the system safety program plan;

(2) a clear definition of the goals and objectives for the safety program and stated management responsibilities to ensure that those goals and objectives are achieved;

(3) an overview of the management structure of the rail transit agency, including:

(A) an organization chart;

(B) a description of how the safety function is integrated into the rest of the rail transit organization; and

(C) clear identification of the lines of authority used by the rail transit agency to manage safety issues;

(4) a description of the process used to control changes to the system safety program plan, which must include:

(A) an annual assessment of whether the system safety program plan should be updated in accordance with §7.86 of this subchapter (relating to Rail Transit Agency's Annual Review); and

(B) coordination with the department, including timeframes for submission, revision, and approval;

(5) a description of the specific activities required to implement the system safety program, including:

(A) tasks to be performed by the rail transit agency as its safety function, by position and management accountability, specified in matrices or a narrative format; and

(B) safety-related tasks to be performed by other rail transit departments, by position and management accountability, specified in matrices or a narrative format;

(6) a description of the process used by the rail transit agency to implement its hazard management program, which must include activities for:

(A) hazard identification;

(B) hazard investigation, evaluation, and analysis;

(C) hazard control and elimination;

(D) hazard tracking; and

(E) requirements for on-going reporting to the department relating to hazard management activities and status;

(7) a description of the process used by the rail transit agency to ensure that safety concerns are addressed in modifications to existing systems, vehicles, and equipment that do not require formal safety certification but may have safety impacts;

(8) a description of the safety certification process required by the rail transit agency to ensure that safety concerns and hazards are adequately addressed before the initiation of passenger operations and before subsequent major projects to extend, rehabilitate, or modify an existing system, or to replace vehicles and equipment;

(9) a description of the process used to collect, maintain, analyze, and distribute safety data to ensure that the safety function within the rail transit organization receives the necessary information to support implementation of the system safety program;

(10) a description of the process used by the rail transit agency to perform accident notification, investigation, and reporting, which must include:

(A) notification thresholds for internal and external organizations;

(B) accident investigation process and references to procedures;

(C) the process used to develop, implement, and track corrective actions that address investigation findings;

(D) reporting to internal and external organizations; and

(E) coordination with the department;

(11) a description of the process used by the rail transit agency to develop an approved, coordinated schedule for all emergency management program activities, which must include:

(A) meetings with external agencies;

(B) emergency planning responsibilities and requirements;

(C) the process used to evaluate emergency preparedness, such as annual emergency field exercises;

(D) after action reports and implementation of findings;

(E) revision and distribution of emergency response procedures;

(F) familiarization training for public safety organizations; and

(G) employee training;

(12) a description of the process used by the rail transit agency to ensure that planned and scheduled internal safety reviews are performed to evaluate compliance with the system safety program plan, which must include:

(A) identification of departments and functions subject to review;

(B) identification of responsibility for scheduling reviews;

(C) the process used for conducting reviews, including the development of checklists and procedures and the issuing of findings;

(D) review of reporting requirements;

(E) tracking the status of implemented recommendations; and

(F) coordination with the department;

(13) a description of the process used by the rail transit agency to develop, maintain, and ensure compliance with rules and procedures having a safety impact, which must include:

(A) identification of operating and maintenance rules and procedures subject to review;

(B) techniques used to assess the implementation of operating and maintenance rules and procedures by employees, such as performance testing;

(C) techniques used to assess the effectiveness of supervision relating to the implementation of operating and maintenance rules; and

(D) the process used for documenting results and incorporating them into the hazard management process;

(14) a description of the process used for facilities and equipment safety inspections, which must include:

(A) identification of the facilities and equipment subject to regular safety related inspection and testing;

(B) techniques used to conduct inspections and testing;

(C) inspection schedules and procedures; and

(D) a description of how results are entered into the hazard management process;

(15) a description of the maintenance audits and inspections program, which must include identification of the affected facilities and equipment, maintenance cycles, documentation required, and the process for integrating identified problems into the hazard management process;

(16) a description of the training and certification program for employees and contractors, which must include:

(A) the categories of safety-related work requiring training and certification;

(B) a description of the training and certification program for employees and contractors in safety-related positions;

(C) the process used to maintain and access employee and contractor training records; and

(D) the process used to assess compliance with training and certification requirements;

(17) a description of the configuration management control process, which must include:

(A) the authority to make configuration changes;

(B) the process used for making changes; and

(C) assurances necessary for formally notifying all involved departments;

(18) a description of the safety program for employees and contractors that incorporates the applicable local, state, and federal requirements, which must include:

(A) the safety requirements that employees and contractors must follow when working on, or in close proximity to, rail transit agency property; and

(B) the processes used for ensuring that the employees and contractors know and follow the requirements;

(19) a description of the hazardous materials program, which must include the process used to ensure knowledge of and compliance with program requirements;

(20) a description of the drug and alcohol program and the process used to ensure knowledge of and compliance with program requirements; and

(21) a description of the measures, controls, and assurances in place to ensure that safety principles, requirements, and representatives are included in the rail transit agency's procurement process.

§7.83.Hazard Management Process.

(a) Each rail transit agency shall develop, and document in its system safety program plan, a process to identify and resolve hazards during its operation, including any hazards resulting from a subsequent system extension, rehabilitation, or modification, from operational changes, or from other changes within the rail transit environment.

(b) The hazard management process must, at a minimum:

(1) define the rail transit agency's approach to hazard management and the implementation of an integrated system-wide hazard resolution process;

(2) specify the mechanisms used for the on-going identification of hazards;

(3) define the process used to evaluate identified hazards and prioritize them for elimination or control;

(4) identify the mechanism used to track through resolution the identified hazards;

(5) define minimum thresholds for the notification and reporting of hazards to the department; and

(6) specify the process used by the rail transit agency to provide on-going reporting of hazard resolution activities to the department.

(c) A rail transit agency shall report to the department each identified hazard within 24 hours of the time that the hazard is identified and shall submit not later than the 15th day of each month a log that lists each hazard that was identified during the preceding month.

§7.84.New State Rail Transit Agency Responsibilities.

(a) A rail transit agency may not begin operation before a system safety program plan is approved by the department.

(b) Each new rail transit agency is required to submit its system safety program plan to the department not later than 180 days before the target date of pre-revenue operations.

(c) The department will conduct an on-site pre-revenue review of each new rail transit agency's system safety program plan within 60 days after the date that the plan is received by the department under subsection (b) of this section.

(d) The department may request additional information or clarification related to, or revisions of, the system safety program plan.

(e) On approval, the department will issue to the chief executive of the rail transit agency a formal letter of approval of the initial system safety program plan.

§7.85.Modifications to a System Safety Program Plan.

(a) If a rail transit agency determines, or is notified by the department, that the safety program plan needs to be modified, the rail transit agency shall submit the modified plan and any subsequently modified procedures to the department for review and approval.

(b) Except as provided by subsection (c) of this section, the rail transit agency may not implement the proposed modifications before the modified plan is approved by the department.

(c) If the rail transit agency determines that a modification is necessary to address an imminent safety hazard, the rail transit agency may make a temporary modification to its system safety program plan before that modification is approved by the department, but the modification must be approved by the department before it may become permanent.

§7.86.Rail Transit Agency's Annual Review.

(a) Annually, each rail transit agency shall conduct an internal review of its system safety program plan to ensure that all elements of the system safety program plan are performing as intended.

(b) The internal review process must, at a minimum:

(1) describe the process used by the rail transit agency to determine if all identified elements of its system safety program plan are performing as intended;

(2) ensure that all elements of the system safety program plan are reviewed in an ongoing manner; and

(3) include checklists or procedures that the rail transit agency will use for the review.

(c) The rail transit agency shall notify the department at least 60 days before the day of conducting the internal safety review. This notification must include any checklists or procedures that will be used during the review.

(d) The rail transit agency shall permit the department to participate in or observe the on-site portions of the rail transit agency's internal review.

(e) Before December 1 of each year, the rail transit agency shall submit a report documenting internal safety review activities that have been performed since the last report and the findings and status of corrective actions.

(f) The annual report must be accompanied by a formal letter, signed by the rail transit agency's chief executive, that:

(1) certifies that the rail transit agency is in compliance with its system safety program plan; or

(2) if the rail transit agency determines that the findings from its internal safety review indicate that it is not in compliance with its system safety program plan, states that the rail transit agency is not in compliance with its system safety program plan, specifies each noncompliance issue, the activities that the rail transit agency will take to achieve compliance, the date that those activities will be completed, and the projected date that compliance with the plan will be achieved.

§7.87.Department System Safety Program Plan Audit.

(a) The department will conduct an audit of the rail transit agency at least once every three years. The audit will evaluate whether the rail transit agency has implemented a system safety program plan that meets the requirements of 49 C.F.R. Part 659, 49 C.F.R. Part 674.27, the department's program standards, and the National Public Transportation Safety Plan and whether the rail transit agency complies with the plan.

(b) The department will provide an audit checklist based on the required elements of the system safety program plan.

(c) The department will verify the required elements by;

(1) interviews;

(2) document review;

(3) field observations;

(4) testing;

(5) measurements;

(6) spot checks; and

(7) demonstrations provided by the rail transit agency staff.

(d) To determine compliance with the system safety program plan, the department will sample accident reports, internal review reports, and the agency's hazard management program.

(e) The audit may be conducted as a single on-site assessment or in an ongoing manner over a three-year cycle.

(f) In planning the audit the department will:

(1) develop the audit schedule in coordination with the rail transit agency;

(2) designate the audit team and an audit team lead;

(3) prepare an audit plan that includes all elements identified in the rail transit agency's system safety program plan;

(4) prepare audit checklists and templates;

(5) identify methods of verification for each checklist item; and

(6) request and review the rail transit agency's safety documents.

(g) In conducting the audit, the department will:

(1) conduct an entrance meeting with the rail transit agency's administration;

(2) conduct interviews with appropriate rail transit staff;

(3) observe on-site operations;

(4) evaluate documents and data maintained on-site;

(5) take measurements and conduct spot checks;

(6) review all checklist items for compliance; and

(7) inform the rail transit agency of initial findings and observations.

(h) The rail transit agency shall cooperate with the department during the audit review and provide access to all documents, records, equipment, and property necessary to complete the audit.

(i) The department will issue a draft report to the rail transit agency within 60 days after the date of the completion of the audit.

(j) The rail transit agency may submit written comments on the draft audit report. The department will include in the final audit report any comments received within 30 days after the date that the draft report was issued.

(k) The department will prepare a final audit report and deliver a copy to the rail transit agency.

(l) Within 45 days after the date of its receipt of the final audit report, the rail transit agency shall provide to the department all corrective action plans necessary to address the findings in the report.

(m) The department will notify the rail transit agency when all findings have been addressed and the audit is closed.

§7.88.Accident Notification.

(a) Each rail transit agency shall notify the department and FTA within two hours of any incident involving a rail transit vehicle or taking place on property used by rail transit agency if the incident:

(1) results in a fatality at the scene;

(2) results in one or more persons suffering serious injury;

(3) results in property damage from a collision involving a rail transit vehicle or derailment of a rail transit vehicle;

(4) results in an evacuation for life safety reasons;

(5) is a collision at a grade crossing resulting in serious injury or a fatality;

(6) is a main-line or yard derailment;

(7) is a collision with an individual resulting in serious injury or a fatality;

(8) is a collision with an object resulting in serious injury or a fatality;

(9) is a runaway train;

(10) is a fire resulting in a serious injury or a fatality; or

(11) is a collision between rail transit vehicles.

(b) If an incident involving a rail transit vehicle or taking place on property used by rail transit agency results in a fatality away from the scene of the incident but within 30 days after the incident, the rail transit agency shall notify the department within two hours of the confirmation of the death of the individual.

(c) A rail transit agency that shares track over the general railroad system of transportation and is subject to the Federal Railroad Administration notification requirements, shall notify the department within two hours of an incident for which the rail transit agency must notify the Federal Railroad Administration.

(d) A rail transit agency must track and report to FTA and the department each accident that does not qualify for reporting under subsection (a) of this section and that results in one or more non-serious injuries that require medical transportation from the accident scene or that results in non-collision related damage to equipment, rolling stock, or infrastructure that disrupts operation. The report must be filed within 30 days after the date of the accident.

(e) A rail transit agency must track and make the resulting information available when requested by the department or FTA any accident or event that does not qualify for reporting under subsection (a), (b), or (d) of this section.

(f) Notification to the department under this section must be provided in the method specified by the department in the program standards and must contain all the information required in the program standards.

§7.89.Accident Investigations.

(a) The department will investigate any accident that is required to be reported under §7.88(a), (b) and (d) of this subchapter.

(b) The department may authorize the rail transit agency to conduct the investigation on the department's behalf or may join the investigation being conducted by the National Transportation Safety Board through the NTSB's Party System.

(c) If the department authorizes the rail transit agency to conduct the investigation, all personnel and contractors in the investigation must be trained in accordance with the Public Transportation Safety Certification Program and department approved procedures shall be followed.

(d) An investigation conducted by a rail transit agency shall be documented in a final report and submitted to the department within 30 days after the date of the accident. The final report must be in the form prescribed in the department's program standard.

(e) If the department does not agree with the rail safety agency's accident report, the department will conduct an accident investigation and will issue a separate accident report.

(f) The department may conduct an independent accident investigation for any accident required to be reported under §7.88(a), (b) and (d) of this subchapter. The rail transit agency shall provide all information and access to all property necessary for the department to conduct the investigation. The department's investigation report will be submitted to the rail transit agency within 45 days after the date of the completion of the report.

(g) If the National Transportation Safety Board conducts the accident investigation, the department and the rail transit agency shall cooperate and provide information to the board when requested.

§7.90.Corrective Action Plan.

(a) Each rail transit agency shall develop a corrective action plan for:

(1) results from investigations in which identified causal and contributing factors are determined by the rail transit agency or the department to require corrective actions; and

(2) findings from safety and security reviews performed by the department that require corrective action.

(b) Each corrective action plan must identify the action to be taken by the rail transit agency, an implementation schedule, and the individual or department responsible for implementation of the plan.

(c) The department will review the corrective action plan within 30 days after the date of receipt. If a plan is not approved, the department will work with the rail transit agency to develop appropriate corrective action plans.

(d) The rail transit agency shall submit correction action reports at 30-day intervals until the issue has been corrected and compliance has been achieved.

(e) The rail transit agency shall provide the department with verification that corrective actions have been implemented, as described in the corrective action plan, or that proposed alternate actions will be implemented, subject to department review and approval.

(f) If the rail transit agency disputes the department's decision related to a corrective action plan, the rail transit agency shall submit an application for administrative review under §7.92 of this subchapter (relating to Administrative Review) not later than 30 days after the date of receipt of the written decision.

(g) Failure to complete a corrective action plan is a violation under this subchapter.

§7.91.Administrative Actions by the Department.

(a) If the department determines that a rail transit agency violates this subchapter, 49 C.F.R. Part 659, 49 C.F.R. Part 674.27, or Transportation Code, Chapter 455, the department may initiate an administrative action.

(b) The department will notify the rail transit agency in writing of any findings of violations.

(c) Notification under subsection (b) of this section will specify each violation identified by the department, the administrative action to be taken by the department, the compliance action needed to address the violation, and the information concerning the process for requesting administrative review of the department's determination.

(d) Within 45 days after the date of receipt of notification under subsection (b) of this section, the rail transit agency shall submit documentation showing compliance with the action needed to address the violation or shall request administrative review under §7.92 of this subchapter (relating to Administrative Review).

(e) Failure to act as required by subsection (d) of this section will lead to the escalation of an enforcement action under §7.93 of this subchapter (relating to Escalation of Enforcement Action)and may lead to the removal of the department's approval of the rail transit agency's system safety program plan.

§7.92.Administrative Review.

(a) If a rail transit agency disagrees with a decision by the department regarding the corrective action plan under §7.90 of this subchapter (relating to Corrective Action Plan) or a violation finding under §7.91 of this subchapter (relating to Administrative Actions by the Department), the rail transit agency may file a request for an administrative review with the executive director.

(b) The request for administrative review must:

(1) be in writing; and

(2) specify the reasons that the department's action is in error and provide evidence that supports the rail transit agency's position.

(c) The executive director or the executive director's designee, who is not below the level of division director, will make a final determination on the appeal within 60 days after the date the executive director receives the request for the appeal and will notify the rail transit agency of the determination. If the final determination upholds the department's decision under §7.90 of this subchapter or finding under §7.91 of this subchapter, the executive director or the executive director's designee will send the final determination to the rail transit agency stating the reason for the decision and setting a deadline for compliance with the department's violation notice or the corrective action plan.

(d) The determination of executive director or the executive director's designee under subsection (c) of this section is final. The rail transit agency is not entitled to a contested case hearing and has no right to appeal the decision of the executive director or the executive director's designee.

(e) Failure of a rail transit agency to comply with a deadline provided by the executive director or the executive director's designee under subsection (c) of this section may result in the rescission of the department's approval of the rail transit agency's system safety program plan and the department may petition a court of competent jurisdiction to halt the operation of the rail transit agency's rail fixed guideway system program.

§7.93.Escalation of Enforcement Action.

(a) If a rail transit agency fails to comply with an administrative action notification, the department will notify the executive director.

(b) The executive director will notify the rail transit agency's governing body of the violation and the failure of the rail transit agency's correction of the violation.

(c) Within 45 days after the date on which the rail transit agency's governing body receives notice under subsection (b) of this section, the governing body shall provide to the executive director evidence that the violation has been resolved.

(d) If the rail transit agency's governing body is unable to show that the corrective action has been satisfactorily completed, the department shall rescind approval of the rail transit agency's system safety program plan.

(e) If the department rescinds approval of a rail transit agency's system safety program plan, the department may petition a court of competent jurisdiction to halt the operation of the rail transit agency's rail fixed guideway system program.

§7.94.Emergency Order to Address Imminent Public Safety Concerns.

(a) Notwithstanding §7.91 of this subchapter (relating to Administrative Actions by the Department), §7.92 of this subchapter (relating to Administrative Review), and §7.93 of this subchapter (relating to Escalation of Enforcement Action), if there is good cause for the executive director, or the executive director's designee, to believe that the operations of a rail transit agency poses an imminent threat to the safety of the general public, the executive director or the executive director's designee immediately will notify the governing body of the rail transit agency.

(b) If the rail transit agency is unable to immediately eliminate the threat identified under subsection (a) of this section, the executive director will rescind approval of the system safety program plan and order the rail transit agency to cease all operations of its rail fixed guideway public transportation system until the rail transit agency eliminates the threat.

(c) If the rail transit agency fails to cease operation of its rail fixed guideway public transportation system in accordance with an order issued under subsection (b) of this section, the department may seek a temporary injunction to enforce the executive director's order.

§7.95.Admissibility; Use of Information.

The data collected and the report of any investigation conducted by the department or a contractor acting on behalf of the department, or any part of a system security plan or safety program plan that concerns security for the system, may not be admitted in evidence or used for any purpose in any action or proceeding arising out of any matter referred to in an investigation except in an action or a proceeding instituted by the state.

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 January 25, 2018.

TRD-201800313

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: March 11, 2018

For further information, please call: (512) 463-8630


CHAPTER 9. CONTRACT AND GRANT MANAGEMENT

SUBCHAPTER A. GENERAL

43 TAC §9.8

The Texas Department of Transportation (department) proposes new §9.8, Enhanced Contract and Performance Monitoring.

EXPLANATION OF PROPOSED NEW SECTION

Government Code, §2261.253(c) requires the department to establish, by rule, a procedure to identify and report to the Texas Transportation Commission (commission) contracts that require enhanced contract or performance monitoring.

New §9.8, Enhanced Contract and Performance Monitoring, is added to require the department to identify and report to the commission the identity and status of those contracts the department has determined pose a serious risk to the department in compliance with Government Code, §2261.253.

FISCAL NOTE

Brian Ragland, Chief Financial Officer, has determined that for each of the first five years in which the proposed rule is in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the rule.

Mr. Kenneth Stewart, Director of Contract Services, has determined that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the proposed rule.

PUBLIC BENEFIT AND COST

Mr. Stewart has also determined that for each year of the first five years in which the proposed rule is in effect, the public benefit anticipated as a result of enforcing or administering the rule will be improvements to the department's management of contracts through the identification and mitigation of risk. There are no anticipated economic costs for persons required to comply with the proposed rule.

There will be no adverse economic effect on small businesses or a municipality with a population of less than 25,000 and therefore, an economic impact statement and regulatory flexibility analysis are not required under Government Code, §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

Mr. Stewart has considered the requirements of Government Code, §2001.0221 and has determined that for the first five years in which the proposed rules are in effect, there is no impact on the growth of state government.

SUBMITTAL OF COMMENTS

Written comments on new §9.8 may be submitted to Rule Comments, General Counsel Division, Texas Department of Transportation, 125 East 11th Street, Austin, Texas 78701-2483 or to RuleComments@txdot.gov with the subject line "Risk Analysis Policy." The deadline for receipt of comments is 5:00 p.m. on March 12, 2018. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed amendments, or is an employee of the department.

STATUTORY AUTHORITY

The new rule is proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission (commission) with the authority to establish rules for the conduct of the work of the department, and more specifically, Government Code, §2261.253, which requires a state agency to adopt rules to establish a procedure to identify each contract requiring enhanced contract or performance monitoring and submit information on the contract to its governing body.

CROSS REFERENCE TO STATUTE

Government Code, §2261.253.

§9.8.Enhanced Contract and Performance Monitoring.

(a) The department shall monitor and report to the Texas Transportation Commission, on a quarterly basis, the performance and status of each contract, other than a low-bid construction and maintenance contract, that is valued at $5 million or more or that the department determines constitutes a high-risk to the department.

(b) The department immediately shall notify the commission of any serious issue or risk that is identified in a contract and that has not been reported in a quarterly report provided under subsection (a) of this section.

(c) This section does not apply to a memorandum of understanding, interagency contract, interlocal agreement, or contract for which there is not a cost.

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 January 25, 2018.

TRD-201800308

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: March 11, 2018

For further information, please call: (512) 463-8630


SUBCHAPTER C. CONTRACTING FOR ARCHITECTURAL, ENGINEERING, AND SURVEYING SERVICES

43 TAC §9.35, §9.41

The Texas Department of Transportation (department) proposes amendments to §9.35, concerning Federal Process, and §9.41, concerning Contract Administration.

EXPLANATION OF PROPOSED AMENDMENTS

The rules for Contracting for Architectural, Engineering, and Surveying Services are being amended in order to streamline the process used by the department for the selection of an engineering or design service that is directly related to a highway construction project and reimbursed with federal-aid highway program funding (the federal process) and to encourage the informal resolution of certain disputes.

Amendments to §9.35, Federal Process, change the procedures used for the federal process. The purpose of those changes is to streamline the process by removing the Request For Qualifications (RFQ) and Statement of Qualifications (SOQ) requirements and relying solely on the Request For Proposal (RFP) and Proposal or Proposal and Interview for selection. Currently, the federal process for the selection of providers consists of three steps, the RFQ/SOQ, the proposal, and an interview. The state-funded process for the selection of contracts consists of one or two steps: the RFQ/SOQ or the RFQ/SOQ and an interview. Whether a contract is procured through one or two steps is based on risk associated with the project cost, number of contracts, or type of services. The removal of the RFQ/SOQ step from the federal process streamlines the process but applies the same rigor of selection as a state-funded contract. The federal regulations (23 CFR §172) consider both options.

Section 9.35(b) is amended to change the deadline for administrative qualification from the closing date of the Request for Qualifications to the closing date of the Request for Proposals.

Amendments to §9.35(c) remove the requirement for the Request for Qualifications and Statement of Qualifications (SOQ) by deleting the reference to the applicability of the selection process under §9.34, related to the Comprehensive Process.

New subsections (d)-(h) outline the selection process based on the Request for Proposal and Proposal process. New subsection (d) outlines the requirements for the RFP. Subsection (e) establishes the requirements for the proposal. Subsection (f) establishes the requirements for proposal screening and evaluation. Subsection (g) establishes the requirements for the shortlist. Subsection (h) establishes the requirement for selection and the factors to determine whether an interview is required.

Amendments to §9.41, Contract Administration, permit the Director of the Professional Engineering Procurement Services Division to resolve an appeal over a prime provider evaluation and to help resolve contracting or compensation disputes. Amendments to subsection (d) replace the references to the department's Consultant Certification Information System with a more generic reference to the department's evaluation database in order to more accurately reflect current practice. New subsection (e) encourages the informal resolution of disputes. New subsection (f) provides a procedure for a prime provider to request a review by the PEPS Division Director regarding performance evaluation. New subsection (g) authorizes the director to participate in the resolution of an unsettled contracting or compensation dispute and points out that the department's contract claim procedure under 43 TAC §9.2 is available to a prime provider.

FISCAL NOTE

Mr. Brian Ragland, Chief Financial Officer, has determined that for each of the first five years in which the proposed amendments are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the amendments.

Mr. Martin L. Rodin, P.E., Director, Professional Engineering Procurement Services Division, has certified that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the amendments.

PUBLIC BENEFIT AND COST

Mr. Rodin has also determined that for each year of the first five years in which the amendments are in effect, the public benefit anticipated as a result of enforcing or administering the amendments will be improvements to the department's provider selection processes. There are no anticipated economic costs for persons required to comply with the amendments as proposed. There will be no adverse economic effect on small businesses or municipality with a population of less than 25,000 and therefor, an economic impact statement and regulatory flexibility analysis are not required under Government Code, §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

Mr. Rodin has considered the requirements of Government Code, §2001.0221 and has determined that for the first five years in which the proposed rules are in effect, there is no impact on the growth of state government.

SUBMITTAL OF COMMENTS

Written comments on the proposed amendments to §9.35 and §9.41 may be submitted to Rule Comments, General Counsel Division, Texas Department of Transportation, 125 East 11th Street, Austin, Texas 78701-2483 or to RuleComments@txdot.gov with the subject line "PEPS Rules." The deadline for receipt of comments is 5:00 p.m. on March 12, 2018. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed amendments, or is an employee of the department.

STATUTORY AUTHORITY

The amendments are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission (commission) with the authority to establish rules for the conduct of the work of the department, and more specifically, §223.041, regarding the use by the department of private sector professional services for transportation projects, and Government Code, Chapter 2254, Subchapter A (Professional Services Procurement Act), which sets forth requirements for selection and contracting of architectural and engineering services.

CROSS REFERENCE TO STATUTE

Government Code, Chapter 2254, Subchapter A (Professional Services Procurement Act) and Transportation Code, §223.041.

§9.35.Federal Process.

(a) Applicability. This section applies to engineering or design related service contract directly related to a highway construction project and reimbursed with federal-aid highway program (FAHP) funding.

(b) Administrative qualification. A firm providing engineering and design related services must be administratively qualified under §9.34(b)(2) - (6) of this subchapter (relating to Comprehensive Process), or use an indirect cost rate applicable under Federal Highway Administration regulations or guidelines, by the closing date of the Request For Proposal [RFQ] to compete for contracts under this section. Section 9.34(b)(7) and (8) of this subchapter do not apply to a contract under this section. [Paragraphs (7) and (8) of §9.34(b) of this subchapter do not apply to a contract under this section.]

(c) Consultant selection team (CST); replacements. Section 9.34(c) and (f) of this subchapter apply to contract procurement under this section. [Except as provided in subsection (b) of this section and in §9.34(i) of this subchapter, the process described in §9.34 of this subchapter applies to contracts under this section.]

(d) Request for proposal (RFP). Not fewer than 14 calendar days before the solicitation closing date, the department will post on a web-based bulletin board an RFP providing the contract information and specifying the requirements for preparing and submitting a proposal.

(e) Proposal. To be considered, a proposal must comply with the requirements specified in the RFP.

(f) Proposal screening and evaluation.

(1) The department may disqualify a proposal if the department has knowledge that a firm on the project team or an employee of a firm on the project team is the subject of a final administrative or judicial determination that the firm or employee has violated a statute or rule of a state licensing entity related to occupational or professional conduct.

(2) If a proposal is not disqualified under paragraph (1) of this subsection, the CST will screen the proposal to determine whether it complies with the requirements specified in the RFP. Each proposal that meets these requirements will be considered responsive to the RFP and evaluated.

(3) The CST will evaluate the responsive proposal according to the evaluation criteria detailed in the RFP based on factors the department has identified as most likely to result in the selection of the most qualified provider.

(g) Short list. The short list will consist of the most qualified providers, as indicated by the proposal scores.

(1) For single contract selections, the minimum number of short-listed prime providers is three, unless fewer than three prime providers submitted a responsive proposal.

(2) For multiple contract selections, the minimum number of short-listed prime providers is the number of desired contracts plus three, unless fewer that the desired number of prime providers submitted a responsive proposal.

(3) Notification.

(A) The department will notify each prime provider that submitted a proposal whether it was short-listed.

(B) The department will notify each short-listed prime provider whether a short list meeting will be held.

(h) Selection process.

(1) The department will determine whether interviews are required for each solicitation and notify providers in the RFP.

(A) If interviews are required, §9.34 (i) and (j) of this subchapter are applicable for this process.

(B) If no interviews are required, the CST will select the best qualified provider, as indicated by the proposal scores, which will include evaluation of the prime provider's past performance scores in the department's evaluation database reflecting less than satisfactory performance. Also, §9.34(j)(2) - (4) of this subchapter are applicable for this process.

(2) An interview is required for any specific deliverable contract that is $1 million or more in value or any indefinite deliverable contract for higher-risk services as determined by the department based on anticipated project costs, number of contracts, or type of services.

[(d) Short list evaluation.]

[(1) Request for proposals and interviews. The department will issue an RFP to the short listed providers. The RFP will provide contract information and specify the requirements for the proposal and interview.]

[(2) Short-list evaluation criteria. The CST will evaluate proposals and interviews according to the criteria specified in the RFP, including the prime provider's past performance scores in the Consultant Certification Information System database reflecting less than satisfactory performance.]

§9.41.Contract Administration.

(a) Prime provider's percentage of work. A prime provider shall perform at least 30 percent of the contracted work with its own work force, unless otherwise approved by the department.

(b) Project manager replacement. The prime provider project manager may not be replaced without the prior written consent of the department.

(c) Department audits. The department may perform interim and final audits.

(d) Performance evaluations.

(1) The department project manager will document the prime provider's performance on the contract by evaluating the project manager and the firm. Evaluations will be conducted during the ongoing contract activity and at the completion of the contract.

(2) Further evaluations pertaining to project constructability may be conducted during project construction and at the completion of the construction contract.

(3) The department will give a copy of each completed performance evaluation to the prime provider for review and comment. The prime provider's comments will be entered into the department's evaluation database [Consultant Certification Information System (CCIS)].

(4) Performance evaluation scores will be entered into the department's evaluation database[CCIS] and may be used for the purpose of provider selection.

(e) Negotiated resolution of disputes. To every extent possible, disputes between a prime provider and the department's project manager should be resolved during the course of the contract.

(f) Prime provider performance evaluation dispute review.

(1) If a resolution is not reached with the department's project manager and district engineer or division director, the prime provider may request a review by the PEPS Division Director by submitting a written request for review to the PEPS Division Director not later than 10 days after the date of receipt of a final signed performance evaluation. In the written request, the prime provider must identify the issue or error and provide supporting information.

(2) The PEPS Division Director will gather information, study relevant issues, and meet informally with the prime provider and relevant department staff. The PEPS Division Director may void the performance evaluation, request a re-evaluation or adjustment, or affirm the original performance evaluation. The PEPS Division Director will provide the decision to the prime provider in writing. The PEPS Division Director's decision is final.

(g) Resolution of contracting or compensation disputes. If resolution of a contracting or compensation dispute between the prime provider and department's project manager or district engineer is not reached, the PEPS Division Director may in the director's discretion participate in the resolution of the dispute. The prime provider may file a written claim under §9.2 of this chapter (related to Contract Claim Procedure).

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 January 25, 2018.

TRD-201800309

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: March 11, 2018

For further information, please call: (512) 463-8630


CHAPTER 27. TOLL PROJECTS

SUBCHAPTER E. FINANCIAL ASSISTANCE FOR TOLL FACILITIES

43 TAC §§27.50 - 27.55, 27.58

The Texas Department of Transportation (department) proposes amendments to §§27.50 - 27.55 and 27.58, all concerning Financial Assistance for Toll Facilities.

EXPLANATION OF PROPOSED AMENDMENTS

The amendments to §27.50 revise the purpose of Subchapter E, Financial Assistance for Toll Facilities, to reflect changes made in Senate Bill 312, 85th Legislature, Regular Session (SB 312). Section 22 of SB 312 amended Transportation Code §222.103 to require that money, from any available source, that is provided by the department as participation in the cost of a toll facility of a public or private entity must be repaid. Section 76 of SB 312 requires that this repayment requirement applies to a loan, grant or other contribution made by the department or the commission on or after September 1, 2017. Section 42 of SB 312 also added new Transportation Code, §372.002, which provides that a toll project entity is not required to repay: (1) funds held in a subaccount created under Transportation Code, §228.012; or (2) funds contributed by the department for a project if the toll project entity commenced the environmental review process for the project on or before January 1, 2014.

The amendments to §27.50, Purpose, provide that, in accordance with Transportation Code, §222.103, the department is authorized to participate in the cost of a toll facility of a public or private entity by spending funds from any available source. The amendments also provide that, in accordance with Transportation Code, §222.103 and §372.002, a toll project entity is required to repay any money contributed by the department as participation in the cost of the entity's toll projects, except for (1) funds held in a subaccount created under Transportation Code, §228.012; or (2) funds contributed by the department for a project if the toll project entity commenced the environmental review process for the project on or before January 1, 2014. These proposed amendments conform the rules to the provisions of §§22, 42, and 76 of SB 312.

The amendments to §27.51, Definitions, add definitions for "financial assistance" and "toll project entity." These terms are used throughout Subchapter E of Chapter 27. The purpose of providing new definitions of these terms is for clarity in the meaning of these terms as used in the amended rules. The amendments also amend the term "Requestor" to replace the reference to "financing" with the newly defined term "financial assistance."

The amendments of §27.52, Available Financing, replaces references to "financing" and "loan or grant funds" with the newly defined term "financial assistance." The newly added §27.52(b) clarifies that the commission may provide financial assistance for which repayment is not required only to a toll project entity as authorized under Transportation Code, §372.002(d), added by SB 312.

The amendments of §27.53, Request, replace references to "financing," "grants," and "loans" with the newly defined term "financial assistance." The amendment of §27.53(a)(1) adds the words "acquire," "design," "finance," and "operate" in the phrase that defines the type of public or private entity that is eligible to submit a request for financing under Subchapter E, Toll Projects. This amendment conforms this phrase to the definition of "Toll project entity" in Transportation Code, §372.001(2).

The amendments of §27.54, Commission Action, replace references to "financing," "grants," and "loans" with the newly defined term "financial assistance."

The amendment of §27.55(a), Financial Assistance Agreement, replaces reference to "financing" with the newly defined term "financial assistance."

The amendment of §27.58, Financial and Credit Requirements, replaces reference to "loan" with the newly defined term "financial assistance."

FISCAL NOTE

Brian Ragland, Chief Financial Officer, has determined that for each of the first five years in which the proposed rules are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the rules.

Mr. Benjamin H. Asher, Director, Project Finance, Debt, and Strategic Contracts Division, has determined that there will be no impact on local economies or overall employment as a result of enforcing or administering the proposed rules.

PUBLIC BENEFIT AND COST

Mr. Asher has also determined that for each year of the first five years in which the proposed rules are in effect, the public benefit anticipated as a result of enforcing or administering the rules will be the department's continued participation in the cost of an entity's toll project through available financial assistance. There are no anticipated economic costs for persons required to comply with the proposed rules.

There will be no adverse economic effect on small businesses or a municipality with a population of less than 25,000 and therefor, an economic impact statement and regulatory flexibility analysis are not required under Government Code, §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

Mr. Asher has considered the requirements of Government Code, §2001.0221 and has determined that for the first five years in which the proposed rules are in effect, there is no impact on the growth of state government.

SUBMITTAL OF COMMENTS

Written comments on the proposed amendments to §§27.50 - 27.55 and 27.58 may be submitted to Rule Comments, General Counsel Division, Texas Department of Transportation, 125 East 11th Street, Austin, Texas 78701-2483 or to RuleComments@txdot.gov with the subject line "Toll Project Repayment Rules." The deadline for receipt of comments is 5:00 p.m. on March 12, 2018. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed amendments, or is an employee of the department.

STATUTORY AUTHORITY

The amendments are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission (commission) with the authority to establish rules for the conduct of the work of the department, and more specifically, Transportation Code, §222.103, which provides authority to the commission to adopt rules to implement the department's cost participation in toll projects in accordance with §222.103(a).

CROSS REFERENCE TO STATUTE

Transportation Code, §222.103 and §372.002.

§27.50.Purpose.

Transportation Code, §222.103 authorizes the Texas Department of Transportation to participate, by spending funds from any available source [grant or by loan], in the cost of the acquisition, construction, maintenance, or operation of a toll facility of a public or private entity, and provides that the Texas Transportation Commission shall require the repayment of any money spent. Transportation Code, §372.002 provides that notwithstanding any other law, a toll project entity is not required to repay to the department any money contributed by the department as participation in the cost of a toll project of the entity if (1) the funds are held in a subaccount created under Transportation Code, §228.012 or (2) a toll project entity commenced the environmental review process for the project on or before January 1, 2014.[.] This subchapter prescribes the policies and procedures by which the department will participate in the cost [financing] of a toll facility that is not under the jurisdiction of the department.

§27.51.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) AASHTO--The American Association of State Highway and Transportation Officials.

(2) Commission--The Texas Transportation Commission.

(3) Department--The Texas Department of Transportation.

(4) Design manual--The latest editions of and successors to all design manuals available from the department, including but not limited to the following:

(A) Roadway Design Manual;

(B) operations and procedures manual of the Environmental Affairs Division;

(C) Pavement Design Manual;

(D) Bridge Design Manual;

(E) Bridge Project Development Manual;

(F) Bridge Geotechnical Manual;

(G) Hydraulic Design Manual;

(H) Texas Manual on Uniform Traffic Control Devices;

(I) standard highway sign designs for Texas; and

(J) traffic control standard sheets booklet of the traffic operations division.

(5) Development costs--Costs associated with the development of a toll facility before all environmental clearances required to commence construction of the facility have been obtained, including, but not limited to, expenses incurred for the preparation of preliminary engineering, traffic and revenue estimates, major investment studies, environmental impact or assessment studies, and feasibility studies and analyses.

(6) Environmental Permits, Issues, and Commitments (EPIC)--Any permit, issue, coordination, commitment, or mitigation obtained to satisfy social, economic, or environmental impacts of a project, including, but not limited to, sole source aquifer coordination, wetland permits, stormwater permits, traffic noise abatement, threatened or endangered species coordination, archeological permits, and any mitigation or other commitments associated with any of those issues.

(7) Executive director--The executive director of the Texas Department of Transportation or designee.

(8) Financial assistance--Participation by the department in the cost of a toll project by providing a requestor with project funding or other contributions funded by the department, as authorized by Transportation Code, §222.103, §366.301, §370.301, and §372.002.

(9) [(8)] Interoperability--With respect to the technology used or to be used by a requestor as part of an electronic toll collection system:

(A) the transponders utilized or to be utilized by the requestor can be read and properly processed by the transponder technology utilized by the department and other governmental and private entities operating toll facilities in this state; and

(B) the transponder technology utilized or to be utilized by the requestor can read and properly process information transmitted by transponders utilized by the department and other governmental and private entities operating toll facilities in this state.

(10) [(9)] Metropolitan planning organization--An organization designated in certain urbanized areas to carry out the transportation planning process as required by Title 23, United States Code, §134.

(11) [(10)] MPO--A metropolitan planning organization.

(12) [(11)] Nonattainment area--An area designated by the U.S. Environmental Protection Agency as not meeting the air quality standards outlined in the Clean Air Act.

(13) [(12)] Requestor--The public or private entity requesting financial assistance [financing ] under this subchapter.

(14) [(13)] Transponder--A device placed on or within a motor vehicle that is capable of transmitting information used to assess or collect tolls.

(15) Toll project entity--Has the meaning assigned by Transportation Code, §372.001.

§27.52.Available Financial Assistance [Financing].

(a) The commission may provide financial assistance [loan or grant funds] under this subchapter for any combination of the following purposes relating to the development, acquisition, construction, maintenance, and operation of a toll facility:

(1) development costs;

(2) preparation of project plans, specifications, and engineer's estimate;

(3) construction, including right of way acquisition and utility relocation;

(4) operation;

(5) maintenance; and

(6) necessary or incidental administrative, legal, and other expenses.

(b) The commission may provide financial assistance under this subchapter for which repayment is not required only to a toll project entity as authorized under Transportation Code, §372.002(d).

§27.53.Request.

(a) Eligibility.

(1) A public or private entity that is authorized by state law to acquire, design, construct, finance, operate, or maintain a toll facility is eligible to submit a request for financial assistance [financing] under this subchapter.

(2) A private entity is not eligible to submit a request for a grant.

(3) For requests submitted after January 1, 2010, to be eligible to receive funds under this subchapter, an entity must have adopted an internal ethics and compliance program that satisfies the requirements of §10.51 of this title (relating to Internal Ethics and Compliance Program) and must enforce compliance with that program.

(b) Basic request. Except as otherwise noted below with respect to a request for funding of development costs only, a request must be accompanied by:

(1) an overview of the project, which shall include a description of the project, the estimated total cost of the project or the preliminary cost estimate of development costs if the request is to fund only development costs, and the proposed use of the requested financial assistance;

(2) a list of all proposed funding sources, including, but not limited to, bond revenue, any equity contribution from the requestor, and the financial assistance [grants or loans] requested under this subchapter, and the proposed use of the funding;

(3) the requested [financing] terms of the financial assistance [if loan financing is requested];

(4) a description of the need, or potential need in the case of a request to fund [for financing of] development costs, for the project and potential impact on traffic congestion and mobility;

(5) a statement of the amount of unencumbered (or unreserved) cash on hand or the requestor's latest audited financial statement;

(6) the latest bond rating obtained by the requestor when using similar sources of revenue to be pledged, if applicable;

(7) a preliminary design study which includes:

(A) an initial route and potential alignments;

(B) the project's logical termini and independent utility, if applicable; and

(C) potential revisions or changes to state highway system facilities necessitated by the project;

(8) a description of the extent to which the requestor's toll collection system or plan for a toll collection system provides interoperability;

(9) unless the request is to fund development costs only, official written approval of the project by the governing body of each entity that may become liable for repayment of any financial assistance;

(10) a binding commitment that the environmental consequences of the proposed project will be fully considered in accordance with, and that the proposed project will comply with, all applicable local, state, and federal environmental laws, regulations, and requirements;

(11) a binding commitment to implement all EPIC; and

(12) documentary evidence, to the extent then available, of community involvement in development of the proposed project and public opinion about it.

(c) Supplemental information and data. Except as provided in subsection (d) of this section, the requestor shall submit the following supplemental information and data.

(1) Financial feasibility study. Unless the request is to fund development costs only, the requestor shall submit a financial feasibility study that includes:

(A) a project construction or asset acquisition schedule identifying the timing, amount, and source of all funds required;

(B) an analysis of the expected financing period of the project;

(C) a pro forma annual cash flow analysis for the expected financing period of the project showing:

(i) if applicable, anticipated revenues to be used in repayment by source;

(ii) anticipated disbursements for preliminary studies and engineering, construction, EPIC, right of way acquisition, utility adjustments, operations, and maintenance;

(iii) anticipated debt service coverage ratios for each debt obligation; and

(iv) funds expected to be used to meet the requirements of any sinking funds, reserve funds, and [loan] amortization payments;

(D) a description of the methods used in preparing the financial feasibility study, the assumptions contained in the study, and persons and entities responsible for the preparation of the study;

(E) if the financial assistance is required to be repaid [loan financing is requested under this subchapter], the length of time the financial assistance will be outstanding or obligated;

(F) the anticipated interest rates for any and all debt outstanding during the term of the financial assistance;

(G) the anticipated benefits to the state and to the requestor resulting from the assistance; and

(H) based upon then available information and analyses, a description of how the requested assistance will, to the extent applicable, accomplish the following (it being understood that failure to accomplish all of these items will not necessarily cause a request to be ineligible for financial assistance):

(i) expand the availability of funding for transportation projects;

(ii) reduce direct state costs;

(iii) maximize private and local participation in the cost of [financing] projects; and

(iv) improve the efficiency of the state's transportation systems.

(2) Project impacts. The requestor shall provide the following information concerning the impact of the project:

(A) how the project will be consistent with the Statewide Transportation Plan and, if appropriate, with the metropolitan transportation plan developed by an MPO;

(B) if the project is in a nonattainment area, how the project will be consistent with the Statewide Transportation Improvement Program, with the conforming plan and Transportation Improvement Program for the MPO in which the project is located (if necessary), and with the State Implementation Plan; and

(C) a preliminary description of any known environmental, social, economic, or cultural resource issues, such as hazardous material sites, impacts on wetlands and other water resources, endangered species, parks, neighborhoods, businesses, historic buildings or bridges, and archeological sites.

(d) Waiver of required information or data. The executive director may waive submission of individual items of information or data required by subsection (c) of this section if:

(1) the information or data required by this section is not relevant to the project or the financial assistance requested;

(2) the department already possesses information or data in a format that may be substituted for the required information or data; or

(3) the past performance of the requestor on previous projects developed in collaboration with the department indicates that the requestor will adequately and prudently address the issues and impacts described in the requested information or data.

§27.54.Commission Action.

(a) Preliminary approval.

(1) Considerations. Prior to granting preliminary approval of an eligible project, the commission will consider:

(A) the transportation need for and anticipated public benefit of the project, including such factors as the project's potential ability to accelerate needed transportation facilities or to reduce financial and other burdens on the commission and the department regarding the development, operation, and maintenance of such facilities;

(B) availability of funding from all sources;

(C) the percentage of the total project cost that is represented by the requested financial assistance;

(D) the financial feasibility of the project;

(E) potential social, economic, and environmental impacts of the project;

(F) the extent to which the requestor's toll collection system or plan for a toll collection system provides interoperability;

(G) evidence of local public support; and

(H) the requestor's past experience with similar projects and past performance working in collaboration with the department in the development of such projects, if applicable.

(2) Project requirements. The commission may grant preliminary approval of a project for financing if it finds that:

(A) the project is consistent with the Statewide Transportation Plan and, if appropriate, with the metropolitan transportation plan developed by an MPO;

(B) if the project is in a nonattainment area, the project will be consistent with the Statewide Transportation Improvement Program, with the conforming plan and Transportation Improvement Program for the MPO in which the project is located (if necessary), and with the State Implementation Plan;

(C) the project will improve the efficiency of the state's transportation systems;

(D) the project will expand the availability of funding for transportation projects or reduce direct state costs; and

(E) if the financial assistance is required to be repaid [for loan financing], the application shows that the project and the requestor are likely to have sufficient revenues to assure repayment of the financial assistance [loan] according to the terms of the agreement.

(3) Authorized actions. By granting preliminary approval, the commission authorizes the executive director to:

(A) evaluate the project's limits, scope, definition, design, and other features, and identify any which adversely affect the financing of the project, including EPIC;

(B) negotiate the amount, type and timing of disbursements of financial assistance;

(C) if the financial assistance is required to be repaid [for loan financing], negotiate an interest rate, a repayment schedule, collateral securing the financial assistance, and default provisions;

(D) negotiate provisions providing, if necessary for the project's financial feasibility, for the subordination of financial assistance [loan financing] provided under this subchapter to any other debt obligations [financing] for the project; and

(E) negotiate all other provisions necessary to complete an agreement under this subchapter.

(4) Relevant facts. In determining the extent to which the executive director will seek changes to the features described in subsection (a)(3)(A) of this section, the executive director shall consider:

(A) the requestor's past experience with similar projects; and

(B) whether the project is intended to become part of the state highway system or otherwise subject to the jurisdiction of the department.

(b) Project impacts and traffic and revenue report.

(1) Prior to receiving final approval under subsection (c) of this section for financial assistance [the grant or loan of funds] for the construction of a project, the requestor shall:

(A) complete a study of the social, economic, and environmental impacts of the project and provide for public involvement in the manner prescribed by Chapter 2, Subchapter C of this title (relating to Environmental Review and Public Involvement For Transportation Projects); and

(B) obtain an investment grade traffic and revenue report for the project from a nationally recognized traffic engineer.

(2) The executive director may waive the requirements of paragraph (1)(A) or (B) of this subsection if the director determines that the study or report is inapplicable or unnecessary due to the nature of the requested assistance.

(c) Final approval. Subsequent to preliminary approval, completion of negotiations, and compliance with this section, the commission may grant final approval if it determines that:

(1) providing financial assistance will prudently provide for the protection of public funds; and

(2) the project will provide for all reasonable and feasible measures to avoid, minimize, or mitigate adverse environmental impacts.

(d) Contingencies. The commission may make its preliminary approval contingent upon the requestor making changes, performing other acts, or establishing certain conditions necessary to provide for the adequacy of any required repayments. The commission may make its final approval subject to the requestor fulfilling specified conditions precedent to the release of financial assistance under this subchapter, which shall also be set forth in the financial assistance agreement. The necessity and nature of such changes, acts or conditions will be determined with consideration for the requestor's past experience with similar projects and past performance working in collaboration with the department in the development of such projects, especially with regard to the requestor's previous use of the commission's financial assistance.

§27.55.Financial Assistance Agreement.

(a) Executive Director. The executive director will negotiate the terms of agreements deemed necessary to comply with any requirements of preliminary approval, to protect the public's safety, and to prudently provide for the protection of public funds while furthering the purposes of this subchapter. These agreements shall include, but not be limited to, terms provided for in this section, as applicable to a particular project. The department shall provide in an agreement such assurances as are reasonably and customarily required by the requestor that are necessary for the purpose of obtaining financial assistance [financing] for, developing, or operating a particular project, provided that such assurances are, in the department's reasonable judgment, consistent with the provisions of the agreement.

(b) Performance of work.

(1) The requestor shall comply with applicable state and federal law, and with all terms and conditions of any agreements. If approval or concurrence of the Federal Highway Administration, the Federal Transit Administration, or any other federal agency is required, the department may require that the requestor seek approval or concurrence through the department. Upon request and, to the extent applicable and permitted by federal law, after reasonable advance notice and opportunity to cure from the department, the requestor shall reimburse the department for any federal funds that are applied by the requestor to pay costs not incurred in conformity with applicable state and federal law.

(2) The requestor shall maintain its books and records in accordance with generally accepted accounting principles in the United States, as promulgated by the Governmental Accounting Standards Board, the Financial Accounting Standards Board, or pursuant to applicable federal or state laws or regulations, and with all other applicable federal and state requirements, subject to any exceptions required by existing bond indentures of the requestor that are applicable to the project, and any exceptions the requestor has historically implemented that have been acceptable to the public debt markets.

(3) The requestor shall, at the requestor's cost, have a full audit performed annually of its books and records by an independent certified public accountant selected by the requestor and reasonably acceptable to the department. The audit must be conducted in accordance with generally accepted auditing standards promulgated by the Financial Accounting Standards Board, the Governmental Accounting Standards Board, or the standards of the Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-profit Organizations, as applicable, and with all other applicable federal and state requirements. The requestor shall cause the auditor to provide a full copy of the audit report and any other management letters or auditor's comments directly to the department within a reasonable period of time after they have been provided to the governing body of the requestor.

(4) The requestor shall retain all work papers and reports for a minimum of four years from the date of the audit report, unless the department notifies the requestor in writing to extend the retention period. If requested by the department, audit work papers shall be made available to the department, within 30 days of request, at any time during the retention period.

(5) The requestor shall retain all original project files, records, accounts, and supporting documents until project completion or until all financial assistance under this subchapter has been repaid, if applicable, or for the period of time required by applicable federal and state law, if longer, unless relieved of this requirement by the department in writing.

(6) Prior to the department assuming jurisdiction of the project, if applicable, the requestor shall ensure that the project, including all its components and appurtenances, is in a condition that complies with §27.57 of this subchapter. All design data, surveys, construction plans, right of way maps, utility permits, and agreements with other entities relating to the project shall be transferred to the department once the department assumes jurisdiction of the project. This paragraph applies to projects that will become a part of the state highway system.

§27.58.Financial and Credit Requirements.

A requestor receiving financial assistance that is required to be repaid [a loan] under this subchapter shall agree to:

(1) provide collateral and security for repayment of financial assistance and completion of the project, or other protections as the executive director may deem necessary;

(2) repay the financial assistance at the specified interest rate over a specified time period according to the repayment schedule;

(3) submit the following financial and operating reports to the department within 30 days of adoption or disclosure, approved by the governing body of the requestor and certified as correct by its chief administrative officer:

(A) the annual operating and capital budgets adopted by the requestor each fiscal year pursuant to a trust agreement or indenture or equivalent document securing bonds issued for a project, and any amended or supplemental operating or capital budget; and

(B) annual financial information and notices of material events required to be disclosed under Rule 15c2-12 of the United States Securities and Exchange Commission (17 C.F.R. §240.15c2-12); and

(4) abide by provisions governing default.

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 January 25, 2018.

TRD-201800310

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: March 11, 2018

For further information, please call: (512) 463-8630