PART 1. TEXAS DEPARTMENT OF TRANSPORTATION

CHAPTER 7. RAIL FACILITIES

SUBCHAPTER E. RAIL FIXED GUIDEWAY SYSTEM STATE SAFETY OVERSIGHT PROGRAM

The Texas Department of Transportation (department) proposes the repeal of §§7.82, 7.83, and 7.86, new §§7.82, 7.83, and 7.86, and amendments to §§7.80, 7.84, 7.85, and 7.87 - 7.95, concerning Rail Fixed Guideway System State Safety Oversight Program.

Recent changes to Federal program requirements as a result of the Infrastructure Investment and Jobs Act (IIJA) necessitate an update to department rules. The IIJA updated 49 U.S.C §5329(d) and (k) to add additional requirements related to risk-based inspections (RBI), rail agency safety committees, training requirements, and public transportation agency safety plan contents. The United States Department of Transportation (USDOT) requires each State Safety Oversight Agency (SSOA) to develop and implement a risk-based inspection (RBI) program. The Federal Transit Administration (FTA) requires the department’s draft RBI program document to be incorporated into the State Safety Oversight Program Standard and submitted for review no later than May 2024, to meet the October 21, 2024, FTA approval deadline. As a result of these updates and FTA requirements, amendments to Chapter 7 which establish standards for and implement state oversight of safety practices of rail fixed guideway systems are required.

Amendments to §7.80, Purpose, update the United States Code (U.S.C) reference to §5329 from the outdated §5330 reference.

Section §7.82, System Safety Program Plan, is repealed, as the contents of the section are obsolete.

New §7.82, Public Transportation Agency Safety Plan, contains the substance of existing §7.83, which is repealed by this rulemaking. The new section deletes as unnecessary the 11 listed requirements of former §7.83, substituting a reference to 49 U.S.C. §5329(d).

New §7.83, Modifications to a Public Transportation Agency Safety Plan, contains the substance of former §7.86, which is being repealed by this rulemaking.

Amendments to §7.84, Hazard Management Process, change the heading to "Safety Risk Management Process." Amendments to subsection (a) substitutes "public transportation agency safety plan" for "safety system program plan." Amendments to subsection (b) replace "hazard management process" with "safety risk management process" to align with federal requirements, while amendments to subsection (c) clarify the reporting standard for hazards in accordance with the State Safety Oversight Program Standard.

Amendments to §7.85, New State Rail Transit Agency Responsibilities, change the heading to "Ensuring Safety In New Rail Systems." The term "system safety program plan" is replaced with "public transportation agency safety plan" throughout the section. Changes are necessary to comply with new federal requirements for public transportation agency safety plans.

New §7.86, Risk Based Inspections, lays out requirements of the risk-based inspection (RBI) program document. It details requirements for conducting inspections in accordance with the RBI, to include using proper protective and safety equipment. The new section requires immediate reporting of safety concerns revealed through inspection activities and requires the department to issue a draft inspection report within 30 days after completion of a safety inspection. It also allows for a rail transit agency to submit written comments to the department's draft inspection report and requires the department to issue a final inspection report within 10 days of the comment deadline. Further, subsection (e) of the new section details the required elements of the inspection report. New subsection (f) requires rail transit authorities to submit data to the department for purposes of detecting changes in safety performance. Requirements for data submission are based on each agency's unique public transportation agency safety plan. The data format, type of data and submission schedule for rail transit agencies to follow will be identified in the risk-based inspection program document. New subsection (g) requires the department to review each rail agency's data at least annually. New subsection (h) requires the department to conduct on-going monitoring, to include at least four onsite inspections per year and other monitoring activities under 49 C.F.R. Part 674. The contents of this new section are necessary to comply with new federal requirements for risk-based inspections in 49 U.S.C §5329.

Amendments to §7.87, Rail Transit Agency's Annual Review, change the heading to "Rail Transit Agency's Annual Internal Safety Review." References to the system safety program plan are updated to public transportation agency safety plan throughout the section. Amendments also delete subsection (f) to remove the requirement for annual reports to be submitted with a formal letter from the chief executive. Changes are necessary to align with new federal requirements in 49 C.F.R. Part 674 that remove the requirement of a formal letter from the chief executive.

Amendments to §7.88, Department System Safety Program Plan Audit, change the heading to "Triennial Review of Rail Transit Agencies." This update conforms to State Safety Oversight Program Standard terminology in 49 C.F.R. Part 674 and FTA program documentation. Amendments also include replacing system safety program plan throughout the section with public transportation agency safety plan. The timeframe for which an agency must provide corrective audit plans to the department after receipt of its final audit plan is reduced from the existing 45 days to 30 days. The timeframe is reduced from 45 to 30 days for increased clarity and to be consistent with the timeframe associated with the development of all other corrective action plans.

Amendments to §7.89, Accident Notification, changes the title to "Event Notification." In addition, amendments to §7.89 (a)(3) replace the reference to "property damage" with "substantial damage" to align the rule with FTA's clarified program guidance that details thresholds requiring reporting to the TxDOT State Safety Oversight Program. Amendments to subsection(a)(3) also delete the reporting of the derailment of a transit vehicle as derailments are already cited in subsection (a)(6). Edits to subsection (d) include reporting each incident to FTA instead of the department and replace accident with incident throughout. Subsection (f) edits clarify reference to the State Safety Oversight Program Standard. Changes are necessary due to new federal requirements in 49 C.F.R. Part 674.

Amendments to §7.90, Accident Investigations, clarify that the department will investigate any accident as required under §7.89 (a) or (b) but remove the reference to (d). Amendments also clarify that investigation personnel must be certified in accordance with the public transportation safety certification training program provided by the U.S. Department of Transportation. These amendments are necessary as a result of updates to federal rail safety requirements.

Amendments to §7.91, Corrective Action Plan, update the reference to safety reviews for clarity by removing the word "safety." These amendments are necessary as a result of updates to federal rail safety requirements.

Amendments to §7.92, Administrative Actions by the Department, remove the reference to 49 C.F.R. part 659 as this is an outdated federal reference and update the reference to system safety program plan in subsection (e) to public transportation agency safety plan. Changes are necessary to align with federal requirements in 49 C.F.R. Part 674.

Amendments to §7.93, Administrative Review, §7.94, Escalation of Enforcement Action, and §7.95, Emergency Order to Address Imminent Public Safety Concerns remove references to "system safety program plan" and replace them with "public transportation agency safety plan." Changes are necessary to align with federal requirements in 49 C.F.R. Part 674.

FISCAL NOTE

Stephen Stewart, Chief Financial Officer, has determined, in accordance with Government Code, §2001.024(a)(4), 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 the department's or commission's enforcing or administering the proposed rules.

LOCAL EMPLOYMENT IMPACT STATEMENT

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 proposed rules and therefore, a local employment impact statement is not required under Government Code, §2001.022.

PUBLIC BENEFIT

Eric Gleason has determined, as required by Government Code, §2001.024(a)(5), 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 enhanced safety reporting, monitoring and hazard mitigation among rail transit agencies throughout the state.

COSTS ON REGULATED PERSONS

Eric Gleason has also determined, as required by Government Code, §2001.024(a)(5), that for each year of that period there are no anticipated economic costs for persons, including a state agency, special district, or local government, required to comply with the proposed rules and therefore, Government Code, §2001.0045, does not apply to this rulemaking.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities, as defined by Government Code, §2006.001, and therefore, an economic impact statement and regulatory flexibility analysis are not required under Government Code, §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

Eric Gleason has considered the requirements of Government Code, §2001.0221 and anticipates that the proposed rules will have no effect on government growth. He expects that during the first five years that the rule would be in effect:

(1) it would not create or eliminate a government program;

(2) its implementation would not require the creation of new employee positions or the elimination of existing employee positions;

(3) its implementation would not require an increase or decrease in future legislative appropriations to the agency;

(4) it would not require an increase or decrease in fees paid to the agency;

(5) it would not create a new regulation;

(6) it would not expand, limit, or repeal an existing regulation;

(7) it would not increase or decrease the number of individuals subject to its applicability; and

(8) it would not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

Eric Gleason has determined that a written takings impact assessment is not required under Government Code, §2007.043.

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 9:30 a.m. on February 15, 2024, 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 9:00 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 §§7.82, 7.83, and 7.86, new §§7.82, 7.83, and 7.86, and amendments to §§7.80, 7.84, 7.85, and 7.87 - 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 "Rail Fixed Guideway System State Safety Oversight Program Rules." The deadline for receipt of comments is 5:00 p.m. on March 4, 2024. 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.

43 TAC §§7.80, 7.82 - 7.95

STATUTORY AUTHORITY

The new sections, and 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, §455.060, which authorizes the commission to adopt rules for the oversight of rail fixed guideway systems.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING 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. §5329 [§5330]. This subchapter prescribes the policies and procedures governing state oversight of rail fixed guideway systems' safety practices.

§7.82.Public Transportation Agency Safety Plan.

A transit agency, other than a small public transportation provider governed by Title 43, Chapter 31 of the Texas Administrative Code, must establish a public transportation agency safety plan that meets the requirements of 49 U.S.C. §5329(d), 49 C.F.R. Part 673, and the State Safety Oversight Program Standard.

§7.83.Modifications to a Public Transportation Agency Safety Plan.

(a) If a rail transit agency determines, or is notified by the department, that the public transportation agency safety 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 public transportation agency safety plan before that modification is approved by the department, but the modification must be approved by the department before it may become permanent.

§7.84.Safety Risk [Hazard] Management Process.

(a) Each rail transit agency shall develop, and document in its public transportation agency safety plan [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 safety risk [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 hazards in accordance with the State Safety Oversight Program Standard [each identified hazard within 24 hours of the time that the hazard is identified].

§7.85.Ensuring Safety In New Rail Systems [New State Rail Transit Agency Responsibilities].

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

(b) Each new rail transit agency is required to submit its public transportation agency safety plan [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 public transportation agency safety plan [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 public transportation agency safety plan [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 public transportation agency safety plan [system safety program plan].

§7.86.Risk Based Inspections.

(a) In addition to the generally applicable State Safety Oversight Program Standard, the department will develop and maintain an individual risk-based inspection program document in consultation with each rail transit agency in the State Safety Oversight Program. The program documents will be incorporated into the State Safety Oversight Program Standard and the rail transit agency safety plans. The program standard is detailed in the subsections below.

(b) The department will conduct inspections, with or without notice, of rail transit agency infrastructure, equipment, records, personnel, and data, including the data that the rail agency collects when identifying and evaluating safety risks, in accordance with the State Safety Oversight Program Standard. A rail transit agency shall provide access to department State Safety Oversight Program (SSOP) staff and contractors to conduct inspections as prescribed in the State Safety Oversight Program Standard.

(c) Department SSOP staff and contractors will comply with a rail transit agency’s protective equipment policy and other safety requirements in the conduct of all inspections.

(d) Department personnel will immediately report safety concerns revealed through inspection activities to the rail transit agency staff upon discovery.

(e) The department will issue a draft inspection report to the rail transit agency within 30 days after the date of the completion of the inspection. The rail transit agency may submit written comments on the draft inspection report within 10 days of receiving the draft inspection report. The department will issue the final inspection report not later than 10 days after the rail transit agency’s deadline to submit comments. The inspection report will contain:

(1) Date and time of inspection;

(2) Department personnel present;

(3) Inspection purpose, functional area, and locations or items inspected;

(4) Issues or deficiencies observed, if applicable;

(5) Recommendations, if applicable;

(6) Photographs, documentation, or diagrams, if available; and

(7) Corrective actions required which may include remedial actions.

(f) Rail transit agencies shall submit data to the department for qualitative and quantitative analysis to detect changes in rail transit safety performance, shifts in risk, and assure policy adherence. Data submission requirements for each rail transit agency are based on that agency’s Safety Management System (SMS) hazard identification and risk assessment policies and procedures identified in the agency’s public transportation agency safety plan. The type of data, format for submission, and schedule of submission shall be identified for each agency in its public transportation agency safety plan.

(g) The department will review rail transit agency data to prioritize inspection activities at least annually for each rail transit agency.

(h) The department will conduct on-going monitoring which will include at least four onsite inspections per year and other monitoring activities pursuant to 49 C.F.R. Part 674 and as described in the State Safety Oversight Program Standard.

§7.87.Rail Transit Agency's Annual Internal Safety Review.

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

(2) ensure that all elements of the public transportation agency safety plan [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 February 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.]

§7.88.Triennial Review of Rail Transit Agencies [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 public transportation agency safety plan [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 State Safety Oversight Program Standard [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 public transportation agency safety plan [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 public transportation agency safety plan [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 public transportation agency safety plan [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 30 [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.

§7.89.Event [Accident] Notification.

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

(1) results in a fatality at the scene;

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

(3) results in substantial [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 accident 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 accident but within 30 days after the accident, 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 incident [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 incident [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 incident [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 State Safety Oversight Program Standard [program standards and must contain all the information required in the program standards].

§7.90.Accident Investigations.

(a) The department will investigate any accident that is required to be reported under §7.89(a) or[,](b) [and (d)] of this subchapter (relating to Event [Accident] Notification).

(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 certified [trained] in accordance with the Public Transportation Safety Certification Training Program provided by the U.S. Department of Transportation, 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 State Safety Oversight Program Standard [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 §7.89(a), (b), or [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.

§7.91.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 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.

(e) 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 §7.93 of this subchapter (relating to Administrative Review) not later than 30 days after the date of receipt of the written decision.

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

§7.92.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 §7.93 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 §7.94 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 public transportation agency safety plan [system safety program plan].

§7.93.Administrative Review.

(a) If a rail transit agency disagrees with a decision by the department regarding the corrective action plan under §7.91 of this subchapter (relating to Corrective Action Plan) or a violation finding under §7.92 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 §7.91 of this subchapter or finding under §7.92 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 public transportation agency safety plan [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.

§7.94.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 public transportation agency safety plan [system safety program plan].

(e) If the department rescinds approval of a rail transit agency's public transportation agency safety plan [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.

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

(a) Notwithstanding §7.92 of this subchapter (relating to Administrative Actions by the Department), §7.93 of this subchapter (relating to Administrative Review), and §7.94 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 public transportation agency safety plan [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.

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 17, 2024.

TRD-202400152

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: March 3, 2024

For further information, please call: (512) 463-3164

STATUTORY AUTHORITY

The repeals 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, §455.060, which authorizes the commission to adopt rules for the oversight of rail fixed guideway systems.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING Transportation Code, Chapter 455, Subchapter B.

§7.82.System Safety Program Plan.

§7.83.Public Transportation Agency Safety Plan.

§7.86.Modifications to a System Safety Program Plan.

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 17, 2024.

TRD-202400153

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: March 3, 2024

For further information, please call: (512) 463-3164

SUBCHAPTER B. CONTRACTS FOR HIGHWAY PROJECTS

43 TAC §§9.11, 9.12, 9.15 - 9.18, 9.23 - 9.25, 9.27

The Texas Department of Transportation (department) proposes the amendments to §§9.11, 9.12, 9.15 - 9.18, and §§9.23 - 9.25, and new §9.27 concerning Contracts for Highway Projects.

EXPLANATION OF PROPOSED AMENDMENTS AND NEW SECTION

Senate Bill (S.B.) 1021, 88th Regular Session, 2023, amended Transportation Code, Chapter 223 to increase the value of contracts for highway projects that the Texas Transportation Commission (commission) may permit a district engineer to let and award locally, from an estimated amount of less than $300,000 to less than $1 million. Similarly, S.B. 1021 increased the value of contracts for building construction projects that the commission may permit a division director to let and award locally, from an estimated amount of less than $300,000 to less than $1 million. The department's procedures for letting and awarding these contracts, given in Title 43, Part 1, Chapter 9, Subchapter B of the Texas Administrative Code, must be amended to use the additional authority provided by the changes made by S.B. 1021.

In conjunction with the increased threshold in Transportation Code, the department is making the corresponding update to the threshold for highway projects for which the highest level of bidder qualification may be waived.

Additional amendments include increasing the minimum bidding capacities granted for the differing levels of bidder qualification; removing the requirement for bids opened at the state level to be read publicly, in conformance with Transportation Code; updating Performance Review Committee rules regarding affiliates and appeal of remedial action; and aligning the rules with current business practices.

Amendments to §9.11, Definitions, repeal the definition of "routine maintenance contract," which is no longer used in these rules.

Amendments to §9.12, Qualification of Bidders, allow the highest level of bidder qualification to be waived for projects with an engineer's estimate of $1 million or less. Subsection (e) is amended to increase the minimum bidding capacity for the differing levels of bidder qualification: $2 million for qualification under a Confidential Questionnaire; $1 million for qualification under a Bidder's Questionnaire without compiled financial information; $1.5 million for qualification under a Bidder's Questionnaire with compiled financial information and at least one year of experience; $2 million for qualification under a Bidder's Questionnaire with compiled financial information and two years of experience, with additional capacity granted for additional years of experience ($6 million maximum); and $2 million for qualification under a Bidder's Questionnaire with reviewed financial information and at least three years of experience. The definition of "affiliated" is moved from §9.12 to new §9.27, Affiliated Entities. Subsection (g) is revised to clarify the process for determining whether bidders are independent from one another.

Amendments to §9.15, Acceptance, Rejection, and Reading of Bids, remove the requirement for bids opened at the state level to be read publicly, in accordance with Transportation Code §223.004, and permit highway and building contracts estimated under $1 million to be locally let by a district engineer or Division Director of the Support Services Division, respectively. The word "telegraph" is removed from subsections (c) and (d) because telegraphs are no longer used as a means for making requests to the department. This change is intended to be clean-up only and not a substantive change; telegraph requests still will not be accepted to request a change of a bid price after the bid has been manually submitted to the department. Finally, the section heading is simplified for clarity.

Amendments to §9.16, Tabulation of Bids, allow the executive director to make the determination of bid error for projects with an engineer's estimate less than $1 million.

Amendments to §9.17, Award of Contract, allow the executive director to award or reject contracts for projects with an engineer's estimate less than $1 million and allow the executive director to rescind the award of such a contract prior to execution upon a determination that it is in the best interest of the state. Allowing rescission of locally let contracts under the same authority as award or rejection, rather than requiring commission involvement, improves efficiency and will streamline the process

Amendments to §9.18, Contract Execution, Forfeiture of Bid Guaranty, and Bond Requirements, remove the requirement for the low bidder to submit a list of all quoting subcontractors and suppliers at contract execution because the department has that information from another source. The amendments also add building contracts to the types of contracts that require a bidder to provide a certificate of insurance before the date that the contractor begins work. This change reflects current department policy.

Amendments to §9.23, Evaluation and Monitoring of Contract Performance, clarify the process used for the evaluation and monitoring of highway improvement contracts. Changes to subsection (b) clarify that the Director of the Support Services Division is responsible for the evaluations related to building contracts. The changes to the section provide that district engineers for highway improvement contracts, other than building contracts, will submit final evaluation scores to the division responsible for monitoring the contract, and the division will periodically review the final evaluation scores. This change formalizes current department policy and clarifies and simplifies the rules. Changes to subsection (d) remove the reference to the Chief Administrative Officer because under subsection (c) the Director of the Support Services Division is responsible for monitoring compliance with building contracts. Because the Support Services Division is the monitor of building contracts, it will already have the evaluations, recovery plans, and associated documentation. Amendments to the section also clarify that for a building contract, the Director of the Support Services Division may modify a proposed corrective action plan and adopt a final plan.

Amendments to §9.24, Performance Review Committee and Actions, allow the committee to recommend remedial action be applied to an entity identified as an affiliate under §9.27. This revision is intended to prevent circumvention of a remedial action by shifting bidding to an affiliated entity that is in existence before or created after the action.

Amendments to §9.25, Appeal of Remedial Action, clarify acceptable methods for delivery of an appeal to the executive director and remove the automatic stay of an imposed remedial action on a timely appeal. This revision is intended to comport with existing language in §9.24 that allows the Deputy Executive Director to take immediate action. Changes to subsection (d) clarify when notice of the executive director's final order on a remedial action is to be given.

New §9.27, Affiliated Entities, is comprised of existing language moved from §9.12 relating to the description of what make two entities affiliated.

FISCAL NOTE

Stephen Stewart, Chief Financial Officer, has determined, in accordance with Government Code, §2001.024(a)(4), 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 the department's or commission's enforcing or administering the proposed rules.

LOCAL EMPLOYMENT IMPACT STATEMENT

Duane Milligan, Director, Construction Division, has determined that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the proposed rules and therefore, a local employment impact statement is not required under Government Code, §2001.022.

PUBLIC BENEFIT

Duane Milligan has determined, as required by Government Code, §2001.024(a)(5), 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 clarity on the department's incorporation of the provisions of S.B. 1021 into its contract letting and awarding procedures.

COSTS ON REGULATED PERSONS

Duane Milligan has also determined, as required by Government Code, §2001.024(a)(5), that for each year of that period there are no anticipated economic costs for persons, including a state agency, special district, or local government, required to comply with the proposed rules and therefore, Government Code, §2001.0045, does not apply to this rulemaking.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

Duane Milligan has also determined, as required by Government Code, §2001.024(a)(5), that for each year of that period there are no anticipated economic costs for persons, including a state agency, special district, or local government, required to comply with the proposed rules and therefore, Government Code, §2001.0045, does not apply to this rulemaking.

GOVERNMENT GROWTH IMPACT STATEMENT

Duane Milligan has considered the requirements of Government Code, §2001.0221 and anticipates that the proposed rules will have no effect on government growth. He expects that during the first five years that the rule would be in effect:

(1) it would not create or eliminate a government program;

(2) its implementation would not require the creation of new employee positions or the elimination of existing employee positions;

(3) its implementation would not require an increase or decrease in future legislative appropriations to the agency;

(4) it would not require an increase or decrease in fees paid to the agency;

(5) it would not create a new regulation;

(6) it would not expand, limit, or repeal an existing regulation;

(7) it would not increase or decrease the number of individuals subject to its applicability; and

(8) it would not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

Duane Milligan has determined that a written takings impact assessment is not required under Government Code, §2007.043.

SUBMITTAL OF COMMENTS

Written comments on the amendments to §§9.11, 9.12, 9.15 - 9.18, and §§9.23 - 9.25 and new §9.27 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 "Contracts for Highway Projects." The deadline for receipt of comments is 5:00 p.m. on March 4, 2024. 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, §223.005, which authorizes the commission to adopt rules concerning bids on a contract estimated by the department to involve an amount less than $1 million.

The authority for the proposed amendments is provided by S.B. No. 1021, 88th Regular Session, 2023. The primary author and the primary sponsor of that bill are Sen. Robert Nichols and Rep. Terry Canales, respectively.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Transportation Code, Chapter 223, Subchapters A-C.

§9.11.Definitions.

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

(1) Advertisement--The public announcement required by law inviting bids for work to be performed or materials to be furnished.

(2) Alternate bid item--A bid item identified by the department as an acceptable substitute for a regular bid item.

(3) Apparent low bidder--The bidder determined to have the numerically lowest total bid as a result of the tabulation of bids by the department.

(4) Award--The commission's acceptance of a bid for a proposed contract that authorizes the department to enter into a contract.

(5) Bid--The offer of the bidder for performing the work described in the plans and specifications including any changes made by addenda.

(6) Bid bond--The security executed by the bidder and the surety furnished to the department to guarantee payment of liquidated damages if the bidder fails to enter into an awarded contract.

(7) Bidder--A person that submits a bid for a proposed contract.

(8) Bidder's Questionnaire--A prequalification form, prescribed by the department, that reflects detailed equipment and experience data but waives audited financial data.

(9) Bidding capacity--The maximum dollar value, as determined by the department, of all of the highway improvement contracts, other than building contracts, that a person may have with the department at any given time.

(10) Bid error--A mathematical mistake by the bidder in the unit bid price entered in the bid.

(11) Bid guaranty--The security furnished by the bidder as a guaranty that the bidder will enter into a contract if awarded the work.

(12) Building contract--A contract entered under Transportation Code, Chapter 223, Subchapter A, for the construction or maintenance of a department building or appurtenant facilities. Building contracts are considered to be highway improvement contracts.

(13) Certificate of insurance--A form approved by the department covering insurance requirements stated in the contract.

(14) Certification of Eligibility Status form--A notarized form describing any suspension, voluntary exclusion, ineligibility determination actions by an agency of the federal government, indictment, conviction, or civil judgment involving fraud, official misconduct, each with respect to the bidder or any person associated with the bidder in the capacity of owner, partner, director, officer, principal investor, project director/supervisor, manager, auditor, or a position involving the administration of federal funds, covering the three-year period immediately preceding the date of the qualification statement.

(15) Commission--The Texas Transportation Commission or authorized representative.

(16) Confidential Questionnaire--A prequalification form, prescribed by the department, reflecting detailed financial and experience data.

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

(18) Disadvantaged business enterprise (DBE)--Has the meaning assigned by §9.202(4) of this chapter (relating to Definitions).

(19) District engineer--The chief executive officer in each of the designated district offices of the department.

(20) Electronic Bidding System (EBS)--The department's automated system that allows bidders to enter and submit their bid information electronically.

(21) Electronic vault--The secure location where electronic bids are stored prior to bid opening.

(22) Emergency--Any situation or condition of a designated state highway, resulting from a natural or man-made cause, that poses an imminent threat to life or property of the traveling public or which substantially disrupts or may disrupt the orderly flow of traffic and commerce.

(23) Executive director--The executive director of the Texas Department of Transportation or the director's designee not below the level of district engineer or division director.

(24) Highway improvement contract--A contract entered into under Transportation Code, Chapter 223, Subchapter A, for the construction, reconstruction, or maintenance of a segment of the state highway system or for the construction or maintenance of a building or other facility appurtenant to a building. The term does not include a materials contract.

(25) Historically underutilized business (HUB)--Has the meaning assigned by §9.352 of this chapter (relating to Definitions).

(26) Joint venture--Any combination of individuals, partnerships, limited liability companies, or corporations submitting a single bid.

(27) Letting official--The executive director or any department employee empowered by the executive director to officially receive bids and close the receipt of bids at a letting.

(28) Maintenance contract--A contract entered under Transportation Code, Chapter 223, Subchapter A, for the maintenance of a segment of the state highway system. A maintenance contract is considered to be a highway improvement contract.

(29) Materials contract--A contract entered under Transportation Code, Chapter 223, Subchapter A, for the purchase of maintenance materials, traffic control devices, or safety devices, as described by Transportation Code, §223.001(b)(2) or (3).

(30) Materials supplier's questionnaire--A prequalification form, prescribed by the department, that gathers information, such as company contact, signature authority, and other requirements, to allow a person to bid on a materials contract.

(31) Materially unbalanced bid--A bid which generates a reasonable doubt that award to the bidder submitting a mathematically unbalanced bid will result in the lowest ultimate cost to the state.

(32) Mathematically unbalanced bid--A bid containing lump sum or unit bid items that do not reflect reasonable actual costs plus a reasonable proportionate share of the bidder's anticipated profit, overhead costs, and other indirect costs.

(33) Person--An individual, partnership, limited liability company, corporation, or joint venture.

(34) Regular bid item--A bid item contained in a proposal form and not designated as an alternate bid item.

[(35) Routine maintenance contract--A maintenance contract that is let through the routine maintenance contracting procedure to preserve and repair roadways and rights of way, with all its components to its designed or accepted configuration.]

(35) [(36)] Small business enterprise (SBE)--Has the meaning assigned by §9.302 of this chapter (relating to Definitions).

§9.12Qualification of Bidders.

(a) Eligibility. To be eligible to bid on a highway improvement contract, other than a building contract, or on a materials contract, potential bidders must satisfy the applicable requirements listed in this section.

(1) If the department has accepted from a person a properly completed Confidential Questionnaire, as described in subsection (c) of this section, and audited financial information, as described in subsection (b)(1) of this section, the person is eligible to bid on any project for which the person meets any necessary special technical qualification requirements, has sufficient available bidding capacity, as determined under subsection (e) of this section, and has submitted a properly completed [a] Certification of Eligibility Status form if it is a federal-aid project.

(2) A person that has submitted only a Bidder's Questionnaire, as described in subsection (d) of this section, may bid only on a specified project for which the department has waived the requirements of paragraph (1) of this subsection. Such a project is referred to as a waived project and generally has one of the following characteristics:

(A) the engineer's estimate for the project is [$300,000 ] less than $1 million;

(B) the project is a [routine] maintenance project;

(C) the project is an emergency project;

(D) the project contains specialty items not normal to the department's roadway projects program; or

(E) the project is for the purchase of goods that may be purchased under a materials contract.

(3) A bidder that submits only a Materials Supplier's Questionnaire is eligible to bid only on a materials contract, including a materials contract awarded under §9.19 of this subchapter (relating to Emergency Contract Procedures).

(b) Financial Information. This section refers to three types of financial information.

(1) Audited financial information is information resulting from an examination of the accounting system, records, and financial statements by an independent certified public accountant in accordance with generally accepted auditing standards. Based on the examination, the auditor expresses an opinion concerning the fairness of the financial information in conformity with generally accepted accounting principles. A bidder that submits audited financial information, as required for a Confidential Questionnaire in accordance with subsection (c) of this section, is eligible to bid on all projects for which the bidder has available bidding capacity, as determined under subsection (e) of this section.

(2) Reviewed financial information may be used in a Bidder's Questionnaire under subsection (d) of this section. The scope of reviewed financial information is substantially less than audited financial information, and the information is the result primarily of inquiries of company personnel and analytical procedures applied to financial data by an independent certified public accountant. Only negative assurance is expressed by the independent accountant, which means that the independent accountant is not aware of any material modifications that should be made in order for the financial information to conform to generally accepted accounting principles. A bidder that submits reviewed financial information is subject to the limitations described in subsections (d) and (e) of this section for a waived project.

(3) Compiled financial information also may be used in a Bidder's Questionnaire under subsection (d) of this section. Compiled financial information only presents information that is the representation of management. No opinion or other assurance is expressed by the independent accountant. A bidder that submits compiled financial information is subject to the limitations described in subsections (d) and (e) of this section for a waived project.

(c) Confidential Questionnaire. A potential bidder must satisfy the requirements of this subsection to be eligible to bid on a highway improvement contract, except as provided by subsection (d) of this section.

(1) A potential bidder must:

(A) submit to the department's Construction Division in Austin 10 days prior to the last day of bid opening a Confidential Questionnaire that includes information, as required by the department, concerning the bidder's equipment and experience as well as financial condition;

(B) have a certified public accountant firm that is licensed to practice public accountancy prepare the audited and any other financial information required by the department;

(C) satisfactorily comply with any technical qualification requirements determined by the department to be necessary for a specific project; and

(D) properly complete the Certification of Eligibility Status form contained in the Confidential Questionnaire for the purpose of bidding on federal-aid projects.

(2) Information adverse to the potential bidder contained in the Certification of Eligibility Status form will be reviewed by the department and the Federal Highway Administration, and may result in the bidder being declared ineligible to submit bids.

(3) Satisfactory audited financial information will grant a 12-month period of qualification from the date of the financial statement.

(4) A three month grace period of qualification, for the purpose of preparing and submitting current audited information, will be granted prior to the expiration date of the financial statement.

(5) The department may require current audited information at any time if circumstances develop which are factors that could alter the potential bidder's financial condition, ownership structure, affiliation status, or ability to operate as an on-going concern.

(d) Bidder's Questionnaire; Materials Supplier's Questionnaire. To be eligible to bid on a contract under this subsection or on a contract to be awarded under §9.19 of this subchapter (relating to Emergency Contract Procedures), a bidder must:

(1) submit to the department's headquarters office in Austin 10 days prior to the date the bid opens, a Bidder's Questionnaire that includes information, as required by the department, concerning a bidder's equipment and experience or for a materials contract, a bidder may submit a Materials Supplier's Questionnaire instead of a Bidder's Questionnaire;

(2) submit unaudited and other data as required in the instructions to the questionnaire submitted under paragraph (1) of this subsection;

(3) satisfactorily comply with any technical qualification requirements determined by the department to be necessary on a specific project; and

(4) for a federal-aid project, properly complete the Certification of Eligibility Status form contained in the questionnaire submitted under paragraph (1) of this subsection. Information adverse to the potential bidder contained in the certification will be reviewed by the department and by the Federal Highway Administration, and may result in the bidder being declared ineligible to submit bids on a federal-aid project.

(e) Bidding capacity; available bidding capacity. The department will make its examination and determination based on the information submitted under subsection (c) or (d) of this section, as appropriate, and advise the bidder of its bidding capacity.

(1) For a bidder submitting a Confidential Questionnaire and audited financial information, the amount of the bidding capacity will be determined by multiplying the net working capital by a factor determined by the department based on the expected dollar volume of projects to be awarded and the number of bidders prequalified by the department. If this calculation results in a positive amount that is not greater than $2 million [$1,000,000], the bidder will receive a bidding capacity of $2 million [$1,000,000] if the bidder has positive net working capital and the bidder provides documentation of at least two years' experience and four completed projects in the field in which the bidder wishes to bid. Bidding capacity determined under this paragraph applies for any project and is not limited to waived projects.

(2) For a bidder submitting a Bidder's Questionnaire with no prior experience in construction or maintenance, or a negative working capital position (i.e., financial statements indicate that current liabilities exceed current assets), will receive a bidding capacity of $1 million [$300,000] for waived projects only.

(3) For a bidder submitting a Bidder's Questionnaire and compiled financial information if the principals of the bidder have at least one year experience in construction or maintenance and have satisfactorily completed at least two projects in these fields, the bidding capacity is $1.5 million [$500,000] for waived projects only.

(4) For a bidder submitting a Bidder's Questionnaire and compiled financial information and the principals of which have at least two years' experience in construction or maintenance and have satisfactorily completed at least four projects in these fields, the bidding capacity is $2 million [$1,000,000] for waived projects only. Those bidders possessing more than two years' experience will be granted an additional $500,000 [$250,000 ] in bidding capacity for each additional year of experience in construction or maintenance, with a maximum bidding capacity of $6 million [$3,000,000] for waived projects only.

(5) For a bidder submitting a Bidder's Questionnaire and reviewed financial information and the principals of which have at least three years of experience in construction or maintenance and have satisfactorily completed at least six projects in these fields, the amount of the bidding capacity will be determined by multiplying the net working capital by a factor determined by the department based upon the expected dollar volume of projects to be awarded and the number of bidders prequalified by the department. In the event that this calculation does not result in an amount greater than $2 million [$1,000,000], the bidder will receive a bidding capacity of $2 million [$1,000,000]. Bidding capacity determined under this paragraph is limited to waived projects only.

(6) A bidder's available bidding capacity is determined by the department by subtracting from the bidder's bidding capacity the amount of the estimated cost of the bidder's uncompleted work on department contracts. Bidding capacity does not apply to a materials contract or building contract and an uncompleted materials or building contract does not affect the bidding capacity or available bidding capacity of a bidder.

(f) Effect of contract performance. A person's bidding capacity or eligibility to bid on a highway improvement contract may be affected by a decision of the deputy executive director under §9.24 of this chapter (relating to Performance Review Committee and Actions).

(g) Affiliated bidders; independence exception [entities]. Bidders that the department determines in accordance with §9.27 of this subchapter (relating to Affiliated Entities) are affiliated are not eligible to submit bids for the same project. A bidder that is determined to be affiliated but that can establish independence from the other affiliated bidders may request, in accordance with this subsection, an exception to its ineligibility. Such a request may be made only once during any 12-month period.

[(1) For purposes of this subchapter:]

[(A) two or more bidders are affiliated if:]

[(i) the bidders share common officers, directors, or controlling stockholders;]

[(ii) a family member of an officer, director, or controlling stockholder of one bidder serves in a similar capacity in another of the bidder;]

[(iii) an individual who has an interest in, or controls a part of, one bidder either directly or indirectly also has an interest in, or controls a part of, another of the bidders;]

[(iv) the bidders are so closely connected or associated that one of the bidders, either directly or indirectly, controls or has the power to control another bidder;]

[(v) one bidder controls or has the power to control another of the bidders; or]

[(vi) the bidders are closely allied through an established course of dealings, including but not limited to the lending of financial assistance; and]

[(B) a family member of an individual is the individual's parent, parent's spouse, step-parent, step-parent's spouse, sibling, sibling's spouse, spouse, child, child's spouse, spouse's child, spouse's child's spouse, grandchild, grandparent, uncle, uncle's spouse, aunt, aunt's spouse, first cousin, or first cousin's spouse.]

(1) [(2)] To request the exception to the department's finding of affiliation, a bidder must submit to the executive director a written request explaining the basis for the exception accompanied by supporting evidence, including an affidavit affirming that the bidder is independent from and not coordinating with the affiliates or any other bidder. The written request must be received not later than the 30th day before the date of the bid opening for which the exception is requested.

(2) [(3)] The department will review the request and supporting evidence provided to determine whether the requester is independent from the other affiliated bidder [affiliation or independence of the potential bidders]. In determining independence, the [The] department will consider, in addition to other affiliation criteria:

(A) transactions between the potential bidders; and

(B) the extent to which the potential bidders share:

(i) equipment;

(ii) personnel;

(iii) office space; and

(iv) finances.

(3) [(4)] If the department finds that the bidders are independent, the director of the division reviewing the request will recommend to the executive director that the requesting bidder be granted an exception.

(4) [(5)] The executive director will review the request, supporting evidence, and department's recommendation and will make the final determination on the request. The executive director will send to the bidder the final written determination. An exception granted to the bidder remains in effect for future bid openings unless the exception is revoked under paragraph (5) [(6)] of this subsection.

(5) [(6)] The granting of an exception under this subsection does not remove the classification of the bidders as affiliated. The department reserves the right to conduct follow-up reviews and revoke the exception if the follow-up reviews indicate that the bidders are no longer independent. A bidder's failure to act independently of its affiliates or other bidder during the period it was granted an exception under this subsection may result in the imposition of sanctions.

(6) [(7)] If bidders classified as affiliates submit bids on the same project, the department reserves the right to reject all bids on that project and relet the contract.

(7) [(8)] Affiliated bidders that are granted an exception under this subsection and that have been sanctioned in accordance with Chapter 10 of this title must meet the exception criteria in that chapter to be eligible to bid.

(h) Building contracts. To be eligible to bid on a building contract, a potential bidder must [satisfactorily] comply only with any [financial, experience, technical, or other] requirements contained in the governing specifications applicable to the project.

§9.15.Acceptance[, Rejection, and Reading] of Bids.

(a) Public opening [reading]. Bids will be opened [and read] in accordance with Transportation Code, §223.004 and §223.005.

(1) Bids for contracts, other than building contracts, with an [engineer's] estimate of less than $1 million [$300,000] may be filed with the district engineer at the headquarters for the district[,] and opened and read at a public meeting conducted by the district engineer, or his or her designee, on behalf of the commission.

(2) Bids for a building contract with an estimate of less than $1 million may be filed with the Director of the Support Services Division at the headquarters of the division and opened and read at a public meeting conducted by the director of that division, or the director's designee, on behalf of the commission.

(b) Bids not considered.

(1) The department will not consider a bid if:

(A) the bid is submitted by an unqualified bidder;

(B) the bid is in a form other than the official bid form issued to the bidder;

(C) the certification and affirmation are not signed;

(D) the bid was not in the hands of the letting official at the time and location specified in the advertisement;

(E) the bidder modifies the bid in a manner that alters the conditions or requirements for work as stated in the proposal form;

(F) the bid guaranty, when required, does not comply with §9.14(d) of this subchapter (relating to Submittal of Bid);

(G) the proposal form was signed by a person who was not authorized to bind the bidder or bidders;

(H) the bid does not include a fully completed HUB plan in accordance with §9.356 of this chapter when required;

(I) a typed proposal form does not contain the information in the format shown on the "Example of Bid Prices Submitted by a Computer Printout" in the proposal form;

(J) the bidder was not authorized to be issued a bid form under §9.13(e) of this subchapter (relating to Notice of Letting and Issuance of Proposal Forms);

(K) the bid did not otherwise conform with the requirements of §9.14 of this subchapter;

(L) the bidder fails to properly acknowledge receipt of all addenda;

(M) the bid submitted has the incorrect number of bid items;

(N) the bidder does not meet the applicable technical qualification requirements;

(O) the bidder fails to submit a DBE commitment within the period described by §9.17(i) of this subchapter (relating to Award of Contract);

(P) the bidder fails to meet the requirements of §9.17(j) of this subchapter relating to participation in the Department of Homeland Security (DHS) E-Verify system; or

(Q) the bidder bids more than the maximum or less than the minimum number of allowable working days shown on the plans when working days is a bid item.

(2) If bids are submitted on the same project separately by a joint venture and one or more members of that joint venture, the department will not accept [and will not read] any of the bids submitted by the joint venture and those members for that project.

(3) If bids are submitted on the same project by affiliated bidders as determined under §9.27 [§9.12(g)] of this subchapter (relating to Affiliated Entities) and the executive director has not granted an affiliation exception under §9.12(g) of this subchapter (relating to Qualification of Bidders) [that subsection], the department will not accept [and will not read] any of the bids submitted by the affiliated bidders for that project.

(c) Revision of bid.

(1) For a manually submitted bid, a bidder may change a bid price before it is submitted to the department by changing the price in the printed bid form and initialing the revision in ink;

(2) For a manually submitted bid, a bidder may change a bid price after it is submitted to the department by requesting return of the bid in writing prior to the expiration of the time for receipt of bids, as stated in the advertisement. The request must be made by a person authorized to bind the bidder. The department will not accept a request by telephone [or telegraph, but will accept a properly signed facsimile request. The revised bid must be resubmitted prior to the time specified for the close of the receipt of bids.

(3) For an electronically submitted bid, a bidder may change a unit bid price in EBS and resubmit electronically to the electronic vault until the time specified for the close of the receipt of bids. Each bid submitted will be retained in the electronic vault. The electronic bid with the latest date and time stamp by the vault will be used for bid tabulation purposes.

(d) Withdrawal of bid.

(1) A bidder may withdraw a manually submitted bid by submitting a request in writing to the letting official before the time and date of the bid opening. The request must be made by a person authorized to bind the bidder. The department will not accept telephone [or telegraph] requests[,] but will accept a properly signed facsimile request. Except as provided in §9.16(c) of this subchapter (relating to Tabulation of Bids) and §9.17(d) of this subchapter, a bidder may not withdraw a bid subsequent to the time for the receipt of bids.

(2) A bidder may withdraw an electronically submitted bid by submitting an electronic or written request to withdraw the bid. An electronic withdrawal request must be submitted using EBS. The request, whether electronic or written, must be submitted by a person who is authorized by the bidder to submit the request and received by the department before the time and date of the bid opening.

(e) Unbalanced bids. The department will examine the unit bid prices of the apparent low bid for reasonable conformance with the department's estimated prices. The department will evaluate a bid with extreme variations from the department's estimate[,] or where obvious unbalancing of unit prices has occurred. For the purposes of the evaluation[,] the department will presume the same retainage percentage for all bidders. In the event that the evaluation of the unit bid prices reveals that the apparent low bid is mathematically and materially unbalanced, the bidder will not be considered in future bids for the same project.

§9.16.Tabulation of Bids.

(a) Official bid amount. Except for lump sum building contract bid items, the official total bid amount for each bidder will be determined by multiplying the unit bid price written in for each item by the respective quantity and totaling those amounts.

(b) Department interpretations.

(1) Bids where unit bid prices have been left blank will be considered by the department to be incomplete and nonresponsive. If a bid has a regular and a corresponding alternate bid item or group of items, the bid will not be considered to be incomplete if either the regular bid item, or group of items, or the alternate bid item, or group of items, has a unit bid price entered. If both a regular bid item, or group of items, and a corresponding alternate bid item, or group of items, are left blank, the bid will be considered to be incomplete and nonresponsive. A bidder who elects to bid on a bid item group corresponding to a regular or alternate bid item, or group of items, must include unit bid prices for each bid item contained in the bid item group.

(2) Bid entries such as no dollars and no cents, zero dollars and zero cents, or numerical entries of $0.00 will be interpreted to be one-tenth of a cent ($.001) and will be entered in the bid tabulation as $.001, except as provided in paragraph (6) of this subsection. Any entry extended to more than three decimal places will be rounded to the nearest tenth of a cent and entered as such. For rounding purposes contained in this subsection, entries of five-hundredths of a cent or more will be rounded up to the next highest tenth of a cent, while entries of four-hundredths of a cent or less will be rounded down to the next lowest tenth of a cent.

(3) If the bidder submits both an electronic bid and a properly completed manual bid, the department will use the electronic bid to determine the total bid amount of the bid. If the bidder submits an electronic bid and a manual bid that is not complete, the department will use the electronic bid to determine the total bid amount of the bid.

(4) If the bidder submits two or more manual bids, all responsive manual bids will be tabulated, and the department will use the lowest bid tabulation to determine the total bid amount of the bid.

(5) If a unit bid price is illegible, the department will make a documented determination of the unit bid price for tabulation purposes.

(6) If a unit bid price has been entered for both the regular bid item, or group of items, and a corresponding alternate bid item, or group of items, the department will determine the option that results in the lowest total cost to the state and tabulate as such, except as provided in subparagraphs (A) and (B) of this paragraph. If both the regular and alternate bids result in the same cost to the state, the department will select the regular bid item or items.

(A) If both a regular bid item or a group of items, and a corresponding alternate bid item or group of items, have an entry such as no dollars and no cents, zero dollars and zero cents, or numerical entries of $0.00, the department will make two calculations using one-tenth of a cent ($.001) for each item as described in paragraph (2) of this subsection. The department will determine the option that results in the lowest total cost to the state and tabulate as such. If both the regular and alternate bids result in the same cost to the state, the department will select the regular bid item or items.

(B) If a unit bid price greater than zero has been entered for either a regular bid or corresponding alternate bid item, or a group of items, and an entry of no dollars and no cents, zero dollars and zero cents, or a numerical entry of $0.00 has been entered for the other corresponding item, or group of items, the department will use the unit bid price that is greater than zero for bid tabulation.

(c) Tie bids. In the event the official bid amount for two or more bidders is equal and those bids are the lowest submitted, each tie bidder will be given an opportunity to withdraw its bid. If two or more tie bidders decline to withdraw their bids, the low bidder will be determined by a coin toss. If all tie bidders request to withdraw their bids, no withdrawals will be allowed and the low bidder will be determined by a coin toss.

(d) Bid guaranty. Not later than 72 hours after bids are opened, the department will mail the check or money order bid guaranty of each bidder except the apparent low bidder to the address specified on the return bidder's check form included in the bid. Bid bonds will not be returned.

(e) Bid errors. The department will consider a bid error that meets the notification requirements contained in paragraph (1) of this subsection and satisfies the criteria contained in paragraph (2) of this subsection in the award of a contract.

(1) The apparent low bidder must submit written notification of an alleged bid error to the department within five business days after the date bids are opened for the project. The notification must identify the items of work involved and must include bid documentation, such as quotes received, calculations made, or other related documentation used in bid preparation that substantiates the alleged error. Once the notification is submitted to the department, it may not be revised or supplemented unless additional information is requested by the department.

(2) The department will consider the following criteria in determining whether a bid error exists:

(A) the alleged bid error relates to a material item of work contained in the bid;

(B) the alleged bid error is a significant portion of the total bid as compared to the intended bid contained in the documentation submitted by the contractor in accordance with paragraph (1) of this subsection, and other contractor bids;

(C) the alleged bid error occurred despite the contractor's exercise of ordinary care in preparing its bid; and

(D) delay in the completion of the project will not have a significant impact on the cost to and safety of the public.

(3) The department may consider an alleged bid error caused by an effort to unbalance the bid as failure to exercise ordinary care.

(4) When the engineer's estimate on a project is less than $1 million [$300,000], the executive director may determine whether a bid error exists[,] under the same conditions and criteria as provided in paragraphs (1) and (2) of this subsection.

§9.17.Award of Contract.

(a) The commission may reject any and all bids opened, read, and tabulated under §9.15 and §9.16 of this subchapter (relating to Acceptance[, Rejection, and Reading] of Bids and Tabulation of Bids, respectively). It will reject all bids if:

(1) there is reason to believe collusion may have existed among the bidders;

(2) the lowest bid is determined to be both mathematically and materially unbalanced;

(3) the lowest bid is higher than the department's estimate and the commission determines that re-advertising the project for bids may result in a significantly lower low bid;

(4) the lowest bid is higher than the department's estimate and the commission determines that the work should be done by department forces; or

(5) the lowest bid is determined to contain a bid error that meets the notification requirements contained in §9.16(e)(1) of this subchapter and satisfies the criteria contained in §9.16(e)(2) of this subchapter.

(b) Except as provided in subsection (c), (d), (e), or (f) of this section, if the commission does not reject all bids, it will award the contract to the lowest bidder.

(c) In accordance with Government Code, Chapter 2252, Subchapter A, the commission will not award a contract to a nonresident bidder unless the nonresident underbids the lowest bid submitted by a responsible resident bidder by an amount that is not less than the greater of:

(1) the amount by which a resident bidder would be required to underbid the nonresident bidder to obtain a comparable contract in the state in which:

(A) the nonresident's principal place of business is located; or

(B) the nonresident is a resident manufacturer; or

(2) the amount by which a resident bidder would be required to underbid the nonresident bidder to obtain a comparable contract in the state in which a majority of the manufacturing related to the contract will be performed.

(d) For a maintenance contract for a building or a segment of the state highway system involving a bid amount of less than $300,000, if the lowest bidder withdraws its bid after bid opening, the executive director may recommend to the commission that the contract be awarded to the second lowest bidder.

(1) For purposes of this subsection, the term "withdrawal" includes written withdrawal of a bid after bid opening, failure to provide the required insurance or bonds, or failure to execute the contract.

(2) The executive director may recommend award of the contract to the second lowest bidder if he or she, in writing, determines that the second lowest bidder is willing to perform the work at the unit bid prices of the lowest bidder; and

(A) the unit bid prices of the lowest bidder are reasonable, and delaying award of the contract may result in significantly higher unit bid prices;

(B) there is a specific need to expedite completion of the project to protect the health or safety of the traveling public; or

(C) delaying award of the contract would jeopardize the structural integrity of the highway system.

(3) The commission may accept the withdrawal of the lowest bid after bid opening if it concurs with the executive director's determinations.

(4) If the commission awards a contract to the second lowest bidder and the department successfully enters into a contract with the second lowest bidder, the department will return the lowest bidder's bid guaranty upon execution of that contract.

(e) If the lowest bidder is not a preferred bidder and the contract will not use federal funds, the department, in accordance with Transportation Code, Chapter 223, Subchapter B, will award the contract to the lowest-bidding preferred bidder if that bidder's bid does not exceed the amount equal to 105 percent of the lowest bid. For purposes of this subsection, "preferred bidder" means a bidder whose principal place of business is in this state or a state that borders this state and that does not give a preference similar to Transportation Code, §223.050.

(f) When additional information is required to make a final decision, the commission may defer the award or rejection of the contract until the next regularly scheduled commission meeting.

(g) Contracts with an engineer's estimate of less than $1 million [$300,000] may be awarded or rejected by the executive director under the same conditions and limitations as provided in subsections (a)-(c) of this section.

(h) The commission may rescind the award of any contract prior to contract execution upon a determination that it is in the best interest of the state. The executive director may rescind the award of a contract awarded under subsection (g) of this section prior to contract execution upon a determination that it is in the best interest of the state. If a contract is rescinded under this subsection [In such an instance], the bid guaranty will be returned to the bidder but no[. No] compensation will be paid to the bidder as a result of the rescission [this cancellation].

(i) For a contract with a DBE goal, all bidders must submit the DBE information required by §9.227 of this chapter (related to Information from Bidders) within five calendar days after the date that the bids are opened.

(j) Prior to contract award, all low bidders must be participating or provide documentation of participation in the Department of Homeland Security's (DHS) E-Verify system within five calendar days after the date that the bids are opened.

§9.18.Contract Execution, Forfeiture of Bid Guaranty, and Bond Requirements.

(a) Contract execution.

(1) Except as provided in paragraphs (2) and (3) of this subsection, within 15 days after the bidder receives written notification of the award of a contract, the bidder must execute and furnish to the department the contract with:

(A) a performance bond and a payment bond, if required and as required by Government Code, Chapter 2253, with powers of attorneys attached, each in the full amount of the contract price except as provided by subsection (c) of this section, executed by a surety company or surety companies authorized to execute surety bonds under and in accordance with state law. Department interpretations made in accordance with §9.16(b)(2) of this subchapter (relating to Tabulation of Bids) will be used to determine the contract amount for providing a performance bond and payment bond, if required, and as required by the Government Code, Chapter 2253;

(B) a certificate of insurance showing coverages in accordance with contract requirements; and

(C) when required, written evidence of current good standing from the Comptroller of Public Accounts.[; and

[(D) a list of all quoting subcontractors and suppliers.]

(2) A bidder awarded a [routine] maintenance contract, [or a] materials contract, or building contract will be required to provide the certificate of insurance prior to the date the contractor begins work as specified in the department's order to begin work.

(3) The bidder selected for the award of a contract containing a DBE or SBE goal, who is not a DBE or SBE, must submit all the information required by the department in accordance with §9.227 of this chapter (relating to Information from Bidders) within the period described by §9.17(i) of this subchapter (relating to Award of Contract) for a contract containing a DBE goal, or §9.319 of this chapter (relating to Contractor's Commitment Agreement) and §9.320 of this chapter [subchapter] (relating to Contractor's Good Faith Efforts) within the period specified in the contract for a contract containing a SBE goal. The bidder must comply with paragraph (1) of this subsection within 15 days after written notification of acceptance by the department of the bidder's documentation to achieve the DBE or SBE goal.

(b) Bid guaranty. The department will retain the bid guaranty of the bidder awarded a contract until after the contract has been executed and bonded. If the bidder selected for the award of a contract with a DBE goal fails to submit the DBE information required by §9.227 of this chapter (related to Information from Bidders) within the period described by §9.17(i) of this subchapter or if the bidder awarded a contract does not comply with subsection (a) of this section, the bid guaranty will become the property of the state, not as a penalty but as liquidated damages. A bidder who forfeits a bid guaranty will not be considered in future bids for the same work unless there has been a substantial change in the design of the project subsequent to the forfeiture of the bid guaranty.

(c) Performance or payment bonds for maintenance contracts. For maintenance contracts the department may require that a performance or payment bond:

(1) be in an amount equal to the greatest annual amount to be paid under the contract and remain in effect for one year from the date work is resumed after any default by the contractor; or

(2) be in an amount equal to the amount to be paid the contractor during the term of the bond and be for a term of two years, renewable biannually [annually] in two-year increments.

(d) Performance or payment bonds for materials contracts. A performance or payment bond is not required for a materials contract.

§9.23.Evaluation and Monitoring of Contract Performance.

(a) The department will develop standards used to evaluate a contractor's performance under a highway improvement contract, including standards for conformance with the project plans and specifications and recordkeeping requirements; compliance with the contract and industry standards for safety; responsiveness in dealing with the department and the public; meeting progress benchmarks and project milestones; addressing project schedule issues, given adjustments, change orders, and unforeseen conditions or circumstances; and completing project on time. The department will develop an evaluation form to be used by department employees in evaluating contract performance.

(b) The district engineer of the district in which a project under a highway improvement contract, other than a building contract, is located, or the Director of the Support Services Division for building contracts shall evaluate the contractor's performance under the contract. An interim evaluation shall be performed as necessary and on each anniversary date of the contract if the project extends for longer than one year. The district engineer for a highway improvement contract, other than a building contract, or the Director of the Support Services Division [Chief Administrative Officer] for a building contract shall approve any final evaluations on the completion of the project. Only final evaluations will be used to determine whether the contractor's contract performance meets the department's requirements.

(c) If the contractor's performance on a project is below the department's acceptable standards for contract performance, the district engineer or the Director of the Support Services Division, as applicable, may work with the contractor to establish a recovery plan for the project. The established project recovery plan will be used to correct significant deficiencies in contractor performance. The district engineer or the Director of the Support Services Division, as applicable, will monitor and document the contractor's compliance with the established project recovery plan.

(d) For [District engineers for] a highway improvement contract, other than a building contract, the district engineer [or the Chief Administrative Officer for a building contract] will submit the final evaluation scores [each evaluation] performed under this section [and each established project recovery plan and resulting documentation ] to the division of the department that is responsible for monitoring the contract.

(e) The division that monitors the final evaluation scores [receives evaluations] of a contractor [under subsection (d) of this section] periodically will review the final evaluation scores [evaluations] of that contractor that were completed during the review period, or if fewer than 10 final evaluations were completed during the review period, up to 10 of the most recent final evaluations completed within the previous three-year period. If the average of the final evaluation scores [evaluations] reviewed [in this period] is below the department's acceptable standards for contract performance, the division will send a notice to the contractor and request that the contractor submit to the division for approval a proposed corrective action plan that will be used to correct significant deficiencies in the performance in all of contractor's projects. The division, in consultation with the department's Chief Engineer for a highway improvement contract, other than a building contract, or the Director of the Support Services Division [Chief Administrative Officer] for a building contract, may modify the proposed corrective action plan and adopt a final plan. The division promptly will send the adopted corrective action plan to the contractor.

(f) For the 120-day period beginning on the day that the adopted corrective action plan is sent under subsection (e) of this section, the division will monitor the contractor's active projects to determine whether the contractor is meeting the requirements of the adopted corrective action plan or if there are no active projects, the division will monitor the contractor's next available projects. Before making a determination under this subsection, the division must consider and document any events outside a contractor's control that contributed to the contractor's failure to meet the performance standards or failure to comply with the corrective action plan. If at the end of the 120-day period contract performance remains below the department's standards for contract performance, the division will notify the contractor and forward to the Performance Review Committee all of the information that it has, which includes at minimum all final evaluations, any adopted corrective action plans, and any information about events outside a contractor's control contributing to the contractor's performance.

§9.24.Performance Review Committee and Actions.

(a) If information is required to be forwarded to a Performance Review Committee under §9.23 of this subchapter (relating to Evaluation and Monitoring of Contract Performance) or if a contractor, including a contractor on a materials contract, has defaulted, the deputy executive director will appoint the members and chairman of the Performance Review Committee. The members and chairman serve at the discretion of the deputy executive director. The Performance Review Committee will review the information submitted to the committee under §9.23(f) of this subchapter, any documentation developed by the department during the evaluation process under §9.23 of this subchapter, and any documentation submitted by the contractor. For a materials contract, the Performance Review Committee will review any documentation developed by the department related to the contract and any documentation submitted by the contractor. The committee will determine whether grounds exist for action under this section. After reviewing the submitted information, the Performance Review Committee may recommend one or more of the following:

(1) take no action;

(2) reduce the contractor's bidding capacity;

(3) prohibit the contractor from bidding on one or more projects;

(4) immediately suspend the contractor from bidding for a specified period of time; or

(5) prohibit the contractor from being awarded a contract on which they are the apparent low bidder.

(b) The Performance Review Committee may recommend that one or more actions listed in subsection (a) of this section be taken immediately to ensure project quality, safety, or timeliness if:

(1) the contractor failed to execute a highway improvement contract or a materials contract after a bid is awarded, unless the contractor honored the bid guaranty submitted under §9.14(d) of this chapter (relating to Submittal of Bid);

(2) the commission, during the preceding 36-month period, rejected two or more bids by the contractor because of contractor error;

(3) the department declared the contractor in default on a highway improvement contract or a materials contract; or

(4) a district notifies the committee through the referring division that a contractor has failed to comply with a project recovery plan established under §9.23(c).

(c) If the Performance Review Committee determines that one or more actions listed in subsection (a) of this section is appropriate, the committee may recommend that the action or actions also be taken against an entity that the committee determines, in accordance with §9.27 of this subchapter (relating to Affiliated Entities), is affiliated with the contractor.

(d) [(c)] If the Performance Review Committee [committee] determines that action under subsection (a), [or] (b), or (c) of this section is appropriate, the committee, except as provided by subsection (g) [(e)] of this section, will confer with the Chief Engineer, or the Chief Administrative Officer for a building contract, on the appropriate action to be taken and applied to the contractor. The committee will send its recommendation to the Deputy Executive Director within 10 business days after the date that it determines the action to be applied.

(e) [(d)] The Deputy Executive Director will consider the Performance Review Committee's recommendation and make a determination of any action to be taken. Within 10 business days after the date of the Deputy Executive Director's determination, the department will send notice to the contractor and to appropriate department employees affected by the determination. The notice will:

(1) state the nature and extent of the remedial action;

(2) summarize the facts and circumstances underlying the action;

(3) explain how the remedial action was determined;

(4) if applicable, inform the entity of the imposition of a suspension; and

(5) state that the provider may appeal the reduction in accordance with §9.25 of this subchapter [(relating to Appeal of Remedial Action)].

(f) [(e)] A decision of the Deputy Executive Director under subsection (e) [(d)] of this section may be appealed in accordance with §9.25 of this title (relating to Appeal of Remedial Action).

(g) [(f)] If the Performance Review Committee, in the performance of its duties under this section finds information that indicates that grounds for the imposition of sanctions under Chapter 10 of this title (relating to Ethical Conduct by Entities Doing Business with the Department) may exist, the committee immediately shall provide that information to the department's Compliance Division.

§9.25.Appeal of Remedial Action.

(a) A remedial action taken under §9.24 of this subchapter (relating to the Performance Review Committee and Actions) may be appealed by delivering to the executive director a written notice of appeal within 15 working days after the effective date of the action as specified in its notice.The written notice must be sent by:

(1) United States Mail, overnight delivery, or hand delivery addressed to: Executive Director, Texas Department of Transportation, 125 East 11th Street, Austin, Texas 78701; or

(2) email to contestedcase@txdot.gov.

(b) If a notice of appeal is timely delivered under subsection (a) of this section,[:]

[(1) the remedial action is automatically stayed beginning on the date that the department receives the notice of appeal until the time that a final order is entered by the executive director under subsection (d) of this section; and]

[(2)] the contractor will be given the opportunity for an informal hearing before the executive director.

(c) If the contractor chooses to have an informal hearing, the executive director will set a time for the hearing at the executive director's earliest convenience and will set the time allowed for oral presentations and written documents presented by the contractor.

(d) If an appeal to the executive director is not timely requested under this section, the executive director will issue a final order on the remedial action when the deadline for requesting an appeal has passed. If an appeal is timely requested, the executive director will issue a final order based on the executive director's decision of the appeal. The executive director will mail to [notify] the contractor a copy of [in writing of] the executive director's final order [appeal decision] within five working days after the date that the final order is signed [decision is made].

(e) A final order issued by the executive director under subsection (d) of this section is not subject to judicial review, except as required by law.

§9.27.Affiliated Entities.

(a) Two or more entities are affiliated if:

(1) the entities share common officers, directors, or controlling stockholders;

(2) a family member of an officer, director, or controlling stockholder of one entity serves in a similar capacity in another of the entities;

(3) an individual who has an interest in, or controls a part of, one entity either directly or indirectly also has an interest in, or controls a part of, another of the entities;

(4) the entities are so closely connected or associated that one of the entities, either directly or indirectly, controls or has the power to control another entity;

(5) one entity controls or has the power to control another of the entities; or

(6) the entities are closely allied through an established course of dealings, including but not limited to the lending of financial assistance.

(b) In this section, an individual's family member is the individual's spouse, child, child's spouse, parent, parent's spouse, step-parent, step-parent's spouse, sibling, sibling's spouse, uncle, uncle's spouse, aunt, aunt's spouse, first cousin, first cousin's spouse, the individual’s grandchild, the individual’s grandparent, the individual's spouse's child, or the individual’s spouse's child's spouse.

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 17, 2024.

TRD-202400155

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: March 3, 2024

For further information, please call: (512) 463-3164

SUBCHAPTER B. STATE PROGRAMS

43 TAC §31.11, §31.13

The Texas Department of Transportation (department) proposes the amendments to §31.11 and §31.13, concerning State Programs.

Due to 2020 Census changes and increased public transportation appropriations from the 88th Legislature, amendments to Chapter 31 governing the allocation of state public transportation grant program funding to transit districts serving rural, small urban, and large urban areas of the state are needed. The 2020 Census resulted in population changes and area designations changes throughout the state.

Proposed amendments to §31.11(a) clarify that an allocation of funds for public transportation is made on an annual basis, beginning at the first fiscal year of each biennium. This change aligns with current division practice of awarding state funds on an annual basis.

Proposed amendments to §31.11(b) clarify that the state funds formula allocation will be made at the beginning of each fiscal year in an amount equal to or less than the amount appropriated from all sources to the commission by the legislature for that biennium for public transportation. The aligns with current division practice of awarding state funds on an annual basis and allows the division flexibility to allocate certain amounts at the beginning of each fiscal year. All appropriated funding shall be allocated over the course of each biennium.

Proposed amendments to §31.11(b)(1) update appropriated funding amounts to include addition funding of $3,770,000 to mitigate Census 2020 impacts. The total appropriation amount is increased to $73,752,134 from $69,982,134. Funding allocations to large urban transit districts is amended from $7,000,000 to $10,365,694, while funding to small urban transit districts is amended to $15,927,748 from $20,118,748. Additionally, the allocation to rural transit districts is amended to $45,917,020 from $42,863,386. These changes are necessary due to the 2020 Census, which updated population figures and area designations throughout the state. The department has worked to ensure equitable funding to all district types post 2020 census, thus the updated allocation figures maintain equal per capita funding reductions across rural, small urban and large urban transit districts.

Proposed amendments to §31.11(b)(1)(A)(i) clarify the total appropriation is increased to $73,752,134 from $69,982,134. This amendment is necessary because of an increased appropriation in the amount of $3,770,000 from the 88th Legislature.

Proposed amendments to §31.11(b)(1)(A)(v) clarify that the commission may, in any year, waive or approve an alternative calculation for allocations under this paragraph to an urban transit district or group of urban transit districts based on unique conditions that negatively affect the performance of the district or group, including natural disaster, pandemic, or another event that specifically affects the service level of the district or group. This amendment clarifies unique conditions that may require an alternate calculation and specifies the department representative who can approve an alternate calculation.

Amendments to §31.11(b)(1)(B)(iii) clarify that the commission may, in any year, wave or approve an alternative calculation for allocations under this paragraph to a rural transit district or group of rural transit districts based on unique conditions that negatively affect the performance of the district or group, including natural disaster, pandemic, or another event that specifically affects the service level of the district or group. This amendment clarifies unique conditions that may require an alternate calculation and specifies the department representative who can approve an alternate calculation.

Amendments to §31.11(b)(2) delete obsolete language for a previous one-time allocation made in fiscal year 2018 to eligible urban and rural transit districts.

Amendments to §31.11(b)(3) renumber the paragraph to §31.11(b)(2). Amendments clarify that allocated funds may be used to address transit district service and capital development needs, changes in district boundaries, unforeseen funding anomalies, emergency services response and recovery needs, changes in economic conditions or availability of assets significantly impacting current year operations expenses, or other needs as determined by the commission. These changes allow more flexibility in the use of formula funds and more clearly define the types of situations that may require targeted funds, such as emergency services response and recovery needs or changes in transit district boundaries. Proposed changes align with situation specific funding challenges that the division has witnessed over the past funding cycles.

Amendments to renumbered §31.11(d) delete the reference to money and replace it with funds. Amendments also clarify that unobligated funds not applied for before the November commission meeting in the second year of a state fiscal biennium may be administered by the commission under the discretionary program. This amendment allows maximum flexibility in use of the funds.

Amendments to §31.11(e) delete the reference to money and replace it with funds. Amendments also clarify that returned funds will be administered by the commission under the discretionary program if they are eligible for reallocation. This change clarifies that not all returned funds are eligible for reallocation.

Amendments to §31.11(f) clarify that the entire application must be certified, not just the statement regarding regional transportation planning implemented in accordance with 49 U.S.C. §5301.

Amendments to §31.13(b) clarify that if funds in excess of the amounts listed in §31.11(b)(1) are appropriated for purposes of public transportation, the commission can allocate those funds on a pro rata basis, competitively, a combination of both pro rata basis and competitively, or as a one-time award. This amendment allows more flexibility in the way funds may be awarded to entities when appropriated amounts are greater than those listed in 31.11(b).

FISCAL NOTE

Stephen Stewart, Chief Financial Officer, has determined, in accordance with Government Code, §2001.024(a)(4), 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 the department's or commission's enforcing or administering the proposed rules.

LOCAL EMPLOYMENT IMPACT STATEMENT

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 proposed rules and therefore, a local employment impact statement is not required under Government Code, §2001.022.

PUBLIC BENEFIT

Eric Gleason has determined, as required by Government Code, §2001.024(a)(5), 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 mitigation of census 2020 impacts and increased funding stability to state supported rural and urban transportation districts.

COSTS ON REGULATED PERSONS

Eric Gleason has also determined, as required by Government Code, §2001.024(a)(5), that for each year of that period there are no anticipated economic costs for persons, including a state agency, special district, or local government, required to comply with the proposed rules and therefore, Government Code, §2001.0045, does not apply to this rulemaking.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities, as defined by Government Code, §2006.001, and therefore, an economic impact statement and regulatory flexibility analysis are not required under Government Code, §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

Eric Gleason has considered the requirements of Government Code, §2001.0221 and anticipates that the proposed rules will noT effect on government growth. He expects that during the first five years that the rule would be in effect:

(1) it would not create or eliminate a government program;

(2) its implementation would not require the creation of new employee positions or the elimination of existing employee positions;

(3) its implementation would not require an increase or decrease in future legislative appropriations to the agency;

(4) it would not require an increase or decrease in fees paid to the agency;

(5) it would not create a new regulation;

(6) it would not expand, limit, or repeal an existing regulation;

(7) it would not increase or decrease the number of individuals subject to its applicability; and

(8) it would not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

Eric Gleason has determined that a written takings impact assessment is not required under Government Code, §2007.043.

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 9:00 a.m. on February 15, 2024, 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 amendments to §31.11, §31.13, 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 ""Public Transportation State Funding Formula Rules." The deadline for receipt of comments is 5:00 p.m. on March 4, 2024. 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, §456.022, which authorizes the commission to adopt rules necessary to allocate funding among eligible public transportation providers.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Texas Transportation Code Chapter 456, Subchapters A, B, and C

§31.11.Formula Program.

(a) Purpose. Transportation Code, Chapter 456 requires the commission to allocate, at the beginning of each state fiscal year [biennium], certain amounts appropriated for public transportation. This section sets out the policies, procedures, and requirements for that allocation.

(b) Formula allocation. At the beginning of each state fiscal year [biennium], an amount that does not exceed [equal to] the amount appropriated from all sources to the commission by the legislature for that biennium for public transportation, other than federal funds and amounts specifically appropriated for coordination, technical support, or other costs of administration, will be allocated to urban and rural transit districts.

(1) If the appropriated amount to which this subsection applies is at least $73,752,134 [$69,982,134], the commission will allocate $10,365,694 [$7,000,000] to large urban transit districts, $15,927,748 [$20,118,748 ] to small urban transit districts, and $45,917,020 [$42,863,386] to rural transit districts. If the appropriated amount is less than $73,752,134 [$69,982,134], the amounts allocated by this paragraph will be reduced proportionately.

(A) Urban funds available under this section will be allocated to urban transit districts as provided by this subparagraph.

(i) If at least $73,752,134 [$69,982,134] is appropriated as described in paragraph (1) of this subsection, an urban transit district receiving funds under Transportation Code, Section 456.006(b), will be allocated for each year of the biennium an amount equal to the amount received by that district in Fiscal Year 1997. These districts include the cities of Arlington (amount $341,663), Grand Prairie (amount $170,584), Mesquite (amount $142,455), and North Richland Hills (amount $116,134). These allocations will be assigned from the small urban transit district funds. If less than $73,752,134 [$69,982,134] is appropriated, the amounts allocated by this clause will be reduced proportionately. If more than $73,752,134 [$69,982,134] is appropriated, an urban transit district to which this clause applies is not eligible for additional funds under paragraph (2) or (3) of this subsection.

(ii) One-half of the funds allocated to small urban transit districts will be based on population by using the latest census data available from the U.S. Census Bureau for each small urbanized area relative to the sum of all small urbanized areas. One-half of the funds allocated to small urban transit districts will be performance-based allocations.

(iii) One-half of the funds allocated to large urban transit districts will be based on population by using the latest census data available from the U.S. Census Bureau for each large urbanized area relative to the sum of all large urbanized areas served by urban transit districts. A large urban transit district with an urbanized area population of 300,000 or more will have the population adjusted to reflect a population level of 299,999. One-half of the funds allocated to large urban transit districts will be performance-based allocations.

(iv) An urban transit district is eligible for a performance-based allocation under clause (ii) or (iii) of this subparagraph, as appropriate, if it is in good standing with the department and has no deficiencies and no findings of noncompliance. The commission will award the performance-based funding based on the following weighted criteria: 30 percent for local funds per operating expense, 20 percent for ridership per capita, 30 percent for ridership per revenue mile, and 20 percent for revenue miles per operating expense. These criteria may be calculated using the urban transit district's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.

(v) The commission, in any year, may waive or approve an alternate calculation of an allocation under this paragraph to an urban transit district or a group of urban transit districts to mitigate unique conditions that negatively affect the performance of the district or group, including natural disaster, pandemic, or another event that specifically affects the service level of the district or group. [If an urban transit district experiences a negative impact in its performance factor calculations due to the acquisition or loss of service area, a natural disaster, including wind, fire, or flood, or an unforeseen anomaly, the department may mitigate that negative impact with an alternate calculation addressing the specific situation.] The alternate calculation may be used in subsequent years at the discretion of the department.

(B) Rural funds allocated under this paragraph will be allocated only to rural transit districts in rural areas based upon need and performance as described in clauses (i) and (ii) of this subparagraph.

(i) Sixty-five percent of the funding under this subparagraph will be allocated to rural transit districts as a need based allocation giving consideration to population weighted at 75 percent and on land area weighted at 25 percent for each rural area relative to the sum of all rural areas.

(ii) Thirty-five percent of the funding under this subparagraph will be allocated to rural transit districts as a performance based allocation. A rural transit district is eligible for funding under this clause if it is in good standing with the department and has no deficiencies and no findings of noncompliance. The commission will award the funding by giving equal consideration to local funds per operating expense, ridership per revenue mile, and revenue miles per operating expense. These criteria may be calculated using the rural transit district's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.

(iii) The commission, in any year, may waive or approve an alternate calculation under this paragraph to a rural transit district or a group of rural transit districts to mitigate unique conditions that negatively affect the performance of the district or group, including natural disaster, pandemic, or another event that specifically affects the service level of the district or group. [If a rural transit district experiences a negative impact in its performance factor calculations due to the acquisition or loss of service area, a natural disaster, as wind, fire, or flood, or an unforeseen anomaly, the department may mitigate that impact with an alternate calculation addressing the specific situation.] The alternate calculation may be used in subsequent years at the discretion of the department.

(C) Funds allocated under this section and any local funds may be used for any transit-related activity except that an urban transit district not included in a transit authority but located in an urbanized area that includes one or more transit authorities may use funds allocated under this section only to provide up to:

(i) 65 percent of the local share requirement for federally financed projects for capital improvements;

(ii) 50 percent of the local share requirement for projects for operating expenses and administrative costs;

(iii) 50 percent of the total cost of a public transportation capital improvement, if the urban transit district certifies that federal money is unavailable for the proposed project and the commission finds that the proposed project is vitally important to the development of public transportation in the state; and

(iv) 65 percent of the local share requirement for federally financed planning activities.

(D) Subject to available appropriation, no award to an urban or rural transit district under this paragraph will be less than 90 percent of the award to that transit district for the previous fiscal year. All allocations under subsection (b)(1)(A) and (B) of this section are subject to revision to comply with this standard.

[(2) A one-time allocation of state funds appropriated for Fiscal Year 2018 will be made to eligible urban and rural transit districts, consistent with the direction from Transportation Code, Section 456.021(a), as amended by H.B. 1140, 85th Legislature, Regular Session, 2017, to address the impacts of revisions to the state funding formula. This paragraph expires August 31, 2018.]

(2) [(3)] The commission will award on a pro rata basis, competitively, or using a combination of both, any appropriated amount that remains after other allocations made under this subsection. Funds awarded under this paragraph may be used to address transit district service and capital development needs, changes in transit district boundaries, unforeseen funding anomalies, emergency services response and recovery needs, changes in economic conditions or availability of assets significantly impacting current year operational expenses, or other needs determined by the commission. [In awarding funds under this paragraph, consideration may be given to coordination and technical support activities, compensation for unforeseen funding anomalies, assistance with eliminating waste and ensuring efficiency, maximum coverage in the provision of public transportation services, funds needed to initiate public transportation service in new designated urbanized areas, adjustment for reductions in purchasing power, reductions in air pollution, or any other appropriate factor.] Awards under this paragraph are not subject to subsection (b)(1)(D) of this section in succeeding fiscal years.

(c) Change in service area. If part of an urban or rural transit district's service area is changed due to declaration by the U.S. Census Bureau, or if the service area is otherwise altered, the department and the urban or rural transit district shall negotiate an appropriate adjustment in the funding awarded to that urban or rural transit district for that funding year or any subsequent year, as appropriate. This negotiated adjustment is not subject to subsection (b)(1)(D) of this section.

(d) Unobligated funds. Any funds [money] under this section that an urban or rural transit district has not applied for before the November commission meeting in the second year of a state fiscal biennium may [will] be administered by the commission under the discretionary program described in §31.13 of this subchapter (relating to Discretionary Program).

(e) Returned funds. Any funds [money] under this section that an urban or rural transit district agrees to return to the department, if eligible for reallocation, will be administered by the commission under the discretionary program described in §31.13 of this subchapter.

(f) Application. To receive funds allocated under this section, a transit district must first submit a completed and certified application, in the form prescribed by the department. The application must include [certification] a statement that the proposed public transportation project is consistent with continuing, cooperating, and comprehensive regional transportation planning implemented in accordance with 49 U.S.C. §5301. Federal approval of a proposed public transportation project will be accepted as a determination that all federal planning requirements have been met.

(g) Project evaluation. In evaluating a project under this section, the department will consider the need for fast, safe, efficient, and economical public transportation and the approval of the FTA, or its successor.

§31.13.Discretionary Program.

(a) Purpose. Transportation Code, Chapter 456 allows the commission to allocate any funds not obligated in accordance with the terms of §31.11 of this subchapter (relating to Formula Program) on a discretionary basis. This section sets out the policies, procedures, and requirements for that discretionary allocation.

(b) Discretionary allocation. In allocating funds in excess of the amounts listed in 31.11(b)(1) of under this subchapter, the commission will calculate the allocation on a pro rata basis, competitive basis, or combination of pro rata and competitive basis, or as a one-time award [The commission will allocate funds under this section] to a local public entity, other than an authority, or to a private nonprofit organization that has the power to operate or maintain a public transportation system. Funds may be used for:

(1) the same purposes as described in §31.11(b) of this subchapter; and

(2) 80 percent of the cost of capital expenditures associated with ridesharing activities.

(c) Application. To receive funds under this section, an entity must first submit a completed and certified application, in the form prescribed by the department. The application must include:

(1) a description of the project, including estimates of the population that would benefit from the project and the anticipated date of project completion;

(2) a statement of the estimated cost of the project, including estimates of the federally financed portions of the project costs; and

(3) certifications that:

(A) local funds are available for local share requirements if required and that the proposed project is consistent with comprehensive regional transportation plans (federal approval of a proposed public transportation project will be accepted as a determination that all federal planning requirements have been met);

(B) federal funds are not available under §31.11 of this subchapter;

(C) equipment furnished by the applicant in connection with ridesharing activities will be used primarily for commuting purposes;

(D) ridesharing activities will be operated on a nonprofit basis without state subsidies and with accountability in operating the van pool equipment; and

(E) any funding available through the United States Department of Transportation to participate in the capitalized portion of state and locally supported ridesharing activities will be applied for and utilized to supplement the availability of local resources for the recapitalization of van pool equipment.

(d) Project evaluation. In evaluating a project under this section, the department will consider the need for fast, safe, efficient, and economical public transportation and the approval of the FTA, or its successor.

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 17, 2024.

TRD-202400154

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: March 3, 2024

For further information, please call: (512) 463-3164