TITLE 43. TRANSPORTATION

PART 1. TEXAS DEPARTMENT OF TRANSPORTATION

CHAPTER 2. ENVIRONMENTAL REVIEW OF TRANSPORTATION PROJECTS

SUBCHAPTER I. MEMORANDUM OF UNDERSTANDING WITH THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY

The Texas Department of Transportation (department) proposes amendments to §§2.302 - 2.306, and 2.308 concerning Memorandum Of Understanding With The Texas Commission On Environmental Quality.

EXPLANATION OF PROPOSED AMENDMENTS

Transportation Code, §201.607, requires the department to adopt a memorandum of understanding (MOU) with each state agency that has responsibilities for the protection of the natural environment or for the preservation of historic or archeological resources. Transportation Code, §201.607, also requires the department to adopt the MOU and all revisions to it by rule and to periodically evaluate and revise the MOU. The department has evaluated its MOU with the Texas Commission on Environmental Quality (TCEQ) adopted in 2019 and finds it necessary to make various changes to Chapter 2, Subchapter I, of the department's rules.

Amendments to §2.302, Authority, consist of some minor grammatical revisions.

Amendments to §2.303, Definitions, remove an outdated and unnecessary definition of "transportation enhancement." They also make some minor grammatical revisions.

Amendments to §2.304, Responsibilities, consist of a minor grammatical revision.

Amendments to §2.305, Coordination during Environmental Review Process, clarify that certain water quality-related information is required to be included in an environmental impact statement or environmental assessment only if a project is within five miles and drains to an impaired assessment unit. They also remove outdated language regarding a "Tier II 401 certification," which is no longer used by TCEQ. They also clarify the existing language regarding TxDOT's consideration of comments made by TCEQ after the comment deadline. They also make some minor grammatical revisions.

Amendments to §2.306, Exchange of Air Quality Information, clarify the existing language regarding air quality information to be provided by TCEQ to TxDOT upon TxDOT's request. The proposed rule language refers to "the counties included in any of the state's non-attainment areas, including nonattainment classifications and current design values for these areas." This is more accurate than the existing rule language, which refers to "the location and severity of conditions in non-attainment areas."

Amendments to §2.308, Review of MOU, revise the existing rule language regarding future reviews of the MOU every five years to specify that there would be no need for a rule revision if, at the end of a five-year interval, TxDOT and TCEQ were to agree that no changes to the MOU are needed.

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

Doug Booher, Environmental Affairs Division Director, 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

Doug Booher 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 continued exchange of information between the department and TCEQ regarding transportation projects and their potential impact on natural resources, and improved clarity regarding the requirements in the MOU. Additionally, the new language in §2.308, Review of MOU, may allow TxDOT and TCEQ to avoid unnecessary rulemaking processes in the future if it is agreed that no MOU changes are needed at the end of future five-year intervals.

COSTS ON REGULATED PERSONS

Doug Booher 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

Doug Booher 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 rules would be in effect:

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

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

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

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

(5) they would not create a new regulation;

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

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

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

TAKINGS IMPACT ASSESSMENT

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

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW

The proposed rules are subject to the Texas Coastal Management Program (CMP) and must be consistent with all applicable CMP policies. The department has concluded that the proposed rules are consistent with all applicable CMP policies.

The CMP policies applicable to transportation projects are set forth at 31 TAC §26.31. This rulemaking does not dictate the siting of transportation projects or contain any other requirements that would contradict any of the CMP policies listed in that rule. Rather, it establishes a mechanism by which the department and TCEQ can efficiently and appropriately exchange information regarding transportation projects and their potential impacts on natural resources, as required by statute at Transportation Code, §201.607, that is acceptable to both department and TCEQ staff. None of the CMP policies listed at §26.31 pertain to the mechanism by which the department and TCEQ exchange information. Additionally, the intent of the MOU is to foster communication, collaboration, and cooperation between TCEQ and the department on the review of transportation projects and protection of State natural resources, which is generally in alignment with the overall purpose of the CMP policies listed at 31 TAC §26.31. For these reasons, this rulemaking is consistent with the CMP policies listed at 31 TAC §26.31.

A copy of this rulemaking will be submitted to the General Land Office for its comments on the consistency of the proposed rulemaking with the CMP. The department requests that the public also provide comments on whether the proposed rulemaking is consistent with the CMP.

SUBMITTAL OF INFORMATION AND COMMENTS

Any person that is required to comply with the proposed rule or any other interested person may provide information related to the cost, benefit, or effect of the proposed rule, including any applicable data, research, or analysis, or may submit written comments on the amendments to §§2.302 - 2.306, and 2.308. The information or comments must 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 "TCEQ MOU rulemaking." The deadline for receipt of the information or comments is 5:00 p.m. on August 10, 2026. In accordance with Transportation Code, §201.811(a)(5), a person who makes a submission must disclose, in writing with the submission, 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, §201.607, requiring the department to have an MOU with TCEQ and to adopt it by rulemaking.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Transportation Code, §§201.604, 201.607, and 201.752.

§2.302. Authority.

(a) Transportation Code §201.607, directs TxDOT [the Texas Department of Transportation] to adopt memoranda of understanding with each agency that has responsibilities for the protection of the natural environment.

(b) Under Water Code §5.104(b) and Health and Safety Code §382.035, TCEQ [the Texas Commission on Environmental Quality (TCEQ)] may enter into a memorandum of understanding with any other state agency and shall adopt by rule any memorandum of understanding between TCEQ and any other state agency.

§2.303. Definitions.

The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise. Any other words or terms used in this MOU [Memorandum of Understanding] have their ordinary meaning, except to the extent such words or terms are defined in §2.5 of this chapter (relating to Definitions), in which case such definitions shall apply.

(1) Assessment unit--For a water body in the state, the smallest geographic area of use support analyzed for such body in TCEQ's [Texas Commission on Environmental Quality's] most recent integrated report prepared under the Clean Water Act (CWA) §305(b) that includes a CWA [Clean Water Act] §303(d) list that has been approved by EPA [the U.S. Environmental Protection Agency]. An assessment unit is based on the primary segment assessment unit identified in the integrated report.

(2) Construction--Activities that involve the building of transportation projects on new location; or the expansion, rehabilitation, or reconstruction, of an existing facility.

(3) EPA--The United States Environmental Protection Agency.

(4) Federal Clean Air Act (FCAA)--The federal statute, including all amendments, that establishes National Ambient Air Quality Standards (NAAQS) and mandates procedures for reaching and maintaining these standards, codified at 42 United States Code §§7401, et seq.

(5) Maintain or maintenance--Activities which involve the upkeep or preservation of an existing facility to prevent that facility's degradation to an unsafe or irreparable state, or which involve the treatment of an existing facility or its environs to meet acceptable standards of operation or aesthetic quality. The activities generally do not require the acquisition of additional right of way or result in increased roadway capacity.

(6) Maintenance area--A geographic area previously designated as a nonattainment [non-attainment] area and subsequently redesignated to attainment subject to the requirement to develop a maintenance plan under 42 United States Code §7505a of the FCAA, and other areas designated as maintenance areas by the EPA.

(7) Non-attainment area--A geographic area designated nonattainment by the EPA as failing to meet the NAAQS for a pollutant for which a standard exists. The EPA designates counties (or portions thereof) as nonattainment under the provisions of 42 United States Code §7407(d). For the official list and boundaries of nonattainment areas, see 40 Code of Federal Regulations Part 81 and relevant notices in the Federal Register.

(8) State Implementation Plan (SIP)--The plan prepared by the TCEQ under 42 United States Code §7410 of the FCAA to attain, maintain, implement, or enforce NAAQS. An approved SIP is the implementation plan, or most recent revision of this plan, that has been approved by EPA under 42 United States Code §7410 of the FCAA.

(9) TCEQ--Texas Commission on Environmental Quality.

(10) TxDOT--Texas Department of Transportation.

(11) Total Maximum Daily Load (TMDL)--The total amount of a substance that a water body can assimilate and still meet the Texas Surface Water Quality Standards as adopted by the TCEQ for a particular water body.

(12) TMDL Implementation Plan (I-Plan)--A plan describing the strategy and activities TCEQ and watershed partners will carry out to improve water quality in the affected watershed.

(13) [(14)] Transportation project--A project to construct, maintain, or improve a highway, rest area, toll facility, aviation facility, public transportation facility, rail facility, ferry, or ferry landing. [A transportation enhancement is also a transportation project.]

§2.304. Responsibilities.

(a) TxDOT is responsible for the development, construction, maintenance, and operation of the state highway system and other transportation systems as designated by the legislature.

(b) TCEQ is the state air and water pollution control agency and is the principal authority in Texas on matters relating to the quality of the state's air and water resources, including the following:

(1) Air quality. TCEQ's primary responsibility relating to air, as designated by Health and Safety Code[,] §382.002, includes, but is not limited to, setting standards, criteria, levels, and emission limits for air quality and air pollution control; and

(2) Water quality. TCEQ is charged with the protection of water quality, water rights, and the adoption and enforcement of rules and performance of other acts relating to the safe construction, maintenance, and removal of dams. TCEQ's jurisdiction over water quality, water rights, and enforcement of [both] water quality, water rights, and dam safety includes, but is not limited to, those items outlined in Water Code §5.013.

§2.305. Coordination during Environmental Review Process.

(a) Applicability. This section specifies when TxDOT shall coordinate a transportation project with TCEQ. TxDOT may elect to coordinate with TCEQ concerning other transportation projects that this MOU does not require to be coordinated.

(1) Not applicable. This MOU does not apply to a project that TxDOT classifies as a categorical exclusion under §2.81 of this chapter (relating to Categorical Exclusions) and TxDOT is not required to coordinate such projects with TCEQ.

(2) Applicable. TxDOT will coordinate with TCEQ on transportation projects that require environmental impact statements (EIS), supplemental EIS [environmental impact statements], and environmental assessments (EA) as defined in §2.5 of this chapter, in the manner described in subsection (b) of this section.

(3) Reevaluations. If TxDOT prepares a written reevaluation for an EIS or EA level transportation project under §2.85 of this chapter (relating to Reevaluations), TxDOT shall coordinate the reevaluation with TCEQ if the earlier coordination concerning the project is no longer valid as a result of changes in the project.

(b) Coordination Process.

(1) TxDOT will submit a notice of availability for each draft EIS [environmental impact statement], supplemental EIS [environmental impact statement], and EA [environmental assessment] pursuant to §2.108 (relating to Notice of Availability) to the e-mail address specified by TCEQ in writing.

(2) If required by the applicable sections, a notice of availability submitted to TCEQ pursuant to this section will include notice of an opportunity for public hearing as provided by §2.106 (relating to Opportunity for Public Hearing) or notice of a public hearing as provided by §2.107 (relating to Public Hearing).

(3) TxDOT shall ensure that each review document for which TCEQ receives notice under paragraph (1) of this subsection meets the following criteria.

(A) Air quality. The review document shall indicate whether the project adds capacity in a nonattainment or maintenance area for one or more federal Clean Air Act NAAQS [National Ambient Air Quality Standards].

(B) Water resources. The review document shall include:

(iii) For a transportation project located in the recharge, transition, or contributing zones of the Edwards Aquifer, pursuant to 30 TAC Chapter 213, Subchapters A and B (relating to Edwards Aquifer), the location of the project within the Edwards Aquifer and a statement that the proposed project and associated activities shall be implemented, operated, and maintained in a manner that complies with the Edwards Aquifer rules and any applicable TCEQ guidance documents in effect to implement the rules.

(4) TCEQ shall have a minimum period of 30 days, from the date of receipt, to review the draft EIS [environmental impact statement], supplemental EIS [environmental impact statement], or EA [environmental assessment] and provide written comments. Before the deadline for review, TCEQ may, if necessary, notify TxDOT that it is extending the review period for no more than 15 additional days. TCEQ will submit any comments to the e-mail address specified by TxDOT in writing.

(5) If TCEQ provides comments within the timeframe described in paragraph (4) of this subsection, TxDOT will consider TCEQ's comments [as applicable]. If TCEQ provides comments [TCEQ's comments will be made part of the project file. TxDOT will consider TCEQ comments submitted to TxDOT] after the timeframe described in paragraph (4) of this subsection, TxDOT will consider TCEQ's comments to the extent possible, given the stage of the environmental review process at the time of the submission.

§2.306. Exchange of Air Quality Information.

(a) Upon request by TxDOT, TCEQ will provide publicly available information to TxDOT related to air quality, such as:

(1) information useful for establishing existing air quality conditions to be described in an environmental review document;

(2) the counties included in any of the state's non-attainment areas, including nonattainment classifications and current design values for these areas [the location and severity of conditions in non-attainment areas];

(3) information affecting transportation-related activity and mobile sources in the state implementation plan; and

(4) proposed and existing locations of roadside air monitors.

(b) TxDOT and TCEQ will exchange data useful for developing mobile source budgets, and data on transportation conformity determinations, including for any area newly designated by EPA as a non-attainment area.

§2.308. Review of MOU.

This MOU shall be examined and, if necessary, revised on a five-year interval basis measured from the effective date of this subchapter [reviewed and updated no later than five years from the adoption date]. TxDOT and TCEQ by rule shall adopt the MOU and all revisions to the MOU. If, on a particular five-year interval, representatives from TxDOT and TCEQ examine this MOU and determine that no revisions are needed, then there shall be no need for a rule revision.If a change in state or federal law or a change in the SIP necessitates a change in this MOU, or if the parties agree that there has been a significant increase in the number of transportation projects requiring TxDOT to coordinate with TCEQ, then representatives from both TxDOT and TCEQ will meet to work out a mutually agreeable amendment to the MOU.

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 June 24, 2026.

TRD-202602590

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 416-3001

CHAPTER 9. CONTRACT AND GRANT MANAGEMENT

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

The Texas Department of Transportation (department) proposes the amendments to §9.32 concerning Selection Processes, Contract Types, Selection Types, and Projected Contracts.

EXPLANATION OF PROPOSED AMENDMENTS

The department's rules currently limit the terms of indefinite deliverable contracts procured for architectural, engineering, or surveying services using the federal selection process (federal ID contracts) to not more than five years, in accordance with 23 CFR §172.9(a)(3)(i). In practice, the Federal Highway Administration (FHWA) allows the department to extend certain federal ID contracts past a five-year term, after formal FHWA concurrence, which is currently requested by letter. FHWA has recommended that the department transition to a documented notification process instead of individual letters. The process will be defined in the department's manual, PEPS Contracting: Project Management for the Project Manager, which has been approved by the FHWA, as required by 23 CFR §172.5(c).

This rule change allows certain federally procured contracts to extend past five years, therefore, providing the department with more flexibility to complete projects.

Amendments to §9.32, Selection Processes, Contract Types, Selection Types, and Projected Contracts, add an exception to the five-year contracting period limit, which would permit the department to grant an extension more than five years with concurrence of the FHWA. Additionally, it delegates the approval to extend the four-year period to issue work authorizations to the executive director.

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

Martin Rodin, Profession Engineering Procurement Services Division Director, 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

Martin Rodin 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 more efficient project delivery.

COSTS ON REGULATED PERSONS

Martin Rodin 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

Martin Rodin 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

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

SUBMITTAL OF INFORMATION AND COMMENTS

Any person that is required to comply with the proposed rule or any other interested person may provide information related to the cost, benefit, or effect of the proposed rule, including any applicable data, research, or analysis, or may submit written comments on the amendments to §9.32. The information or comments must 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 "Amendments to §9.32." The deadline for receipt of the information or comments is 5:00 p.m. on August 10, 2026. In accordance with Transportation Code, §201.811(a)(5), a person who makes a submission must disclose, in writing with the submission, 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.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Government Code, Chapter 2254, Subchapter A and Transportation Code, §223.041.

§9.32. Selection Processes, Contract Types, Selection Types, and Projected Contracts.

(a) Selection processes. The department will issue RFPs and select providers under the following selection processes: non-federal under §9.34 of this subchapter (relating to Non-federal Process), federal under §9.35 of this subchapter (relating to Federal Process), emergency under §9.38 of this subchapter (relating to Emergency Contract Process), and urgent and critical under §9.39 of this subchapter (relating to Urgent and Critical Process).

(b) Contract types. The department will offer three types of contracts: indefinite deliverable, specific deliverable, and multiphase.

(1) An indefinite deliverable contract may be used for a single project or for multiple projects. The RFP will describe the typical work types to be performed under the contract.

(A) Categorical limitations on contract dollar value may be established by the executive director or the executive director's designee.

(B) The contract period in which work authorizations may be issued may not be longer than four years after the date of contract execution, unless approved by the executive director [Texas Transportation Commission].

(C) Supplemental agreements may be issued to extend the contract period, but only as necessary to complete work on an existing work authorization. Except as provided by this subparagraph, the [The] contract period for contracts procured using the process provided by §9.35 of this subchapter may not extend more than five years beyond the execution date. The Professional Engineering Procurement Services (PEPS) Division Director may extend the contract period to more than five years beyond the execution date with concurrence of the Federal Highway Administration.

(2) A specific deliverable contract may be used for a single project or for multiple projects. The RFP will specify the specific deliverables to be provided under the contract.

(3) A multiphase contract may be used for a single project or for multiple projects. The RFP will describe the services to be provided under the contract and will divide the services into phases. The specific scope of work may be established, and the associated costs negotiated and authorized, by phase as the project progresses.

(c) Selection types.

(1) Single contract selection. One contract will result from the RFP.

(2) Multiple contract selection. More than one contract of similar work types will result from the RFP. The RFP will indicate the number and type of contracts.

(d) Projected contracts list. Quarterly, the department will publish on the department's website a list of projected contracts for architectural, engineering, and surveying services.

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 June 24, 2026.

TRD-202602591

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 416-2037

The Texas Department of Transportation (department) proposes new §9.43 concerning the preclusion from providing architectural engineering and surveying services.

EXPLANATION OF PROPOSED AMENDMENTS AND NEW SECTION

Amendments to 43 Texas Administrative Code, Chapter 9, Subchapter C, Contracting for Architectural, Engineering, and Surveying Services, are needed to implement changes made to Government Code, §2261.260, related to the department's Policy for Private Design Professionals, by the enactment of House Bill 3989 by the 88th Texas Legislature Regular Session. The purpose of this rulemaking is to establish a policy for determining when a private design professional is precluded from performing a service for the department due to a conflict of interest or potential conflict of interest and to provide a process for a private design professional to appeal a negative determination.

New §9.43, Preclusions, establishes the procedure under which for a private design professional is precluded performing a service for the department. Subsection (a) defines a person who is subject to the requirements of these rules. Subsection (b) authorizes preclusion due to a conflict of interest or potential conflict of interest. The conflict of interest is described as one under §10.6 (related to Conflict of Interest) under this title.

The proposed new §9.43(c) Disclosure of a conflict of interest by a provider, requires the provider to disclose a known conflict of interest or potential conflict of interest. This disclosure must occur prior to the participation in a procurement or contract if the conflict of interest or potential conflict of interest is known at that time. Also, upon discovery, the provider is required to disclose a conflict of interest or potential conflict of interest when performing or will perform services on the same project or at the same location for the department and another client. This information is necessary for the department to ensure that all state contracts comply with federal and state laws and the department rules regarding entities doing business with the department.

The proposed new §9.43(d) Determination Request, establishes a procedure whereby a provider may submit a written preclusion determination request to the department prior to a solicitation, during the solicitation process, or when the provider obtains knowledge of a potential conflict of interest for a determination by the department. The department will respond within 30 days of such a request. This will allow the department to consider conflict issues in a timely manner to allow all parties to make informed decisions about participating in the solicitation and to keep the projects moving forward when issues arise after the contract is awarded.

The proposed new §9.43(e) Preclusion Determination, outlines the process the department will use to determine if a conflict exists and whether the provider should be precluded from participating in the project. In the case where the providers tasks to be performed are separate and distinct from those it will perform for another client, then no conflict exists. When a conflict exists, and no mitigating procedures can be implemented, the department may determine that a provider be precluded from the conflicting element of the department's project. If it is determined that a conflict of interest exists, the department will provide written notice to the provider of a preclusion from participation in the project, assignment, or procurement. On receipt of such a determination, the provider may propose a mitigation measure to minimize the conflict. The department will determine if a mitigation measure is appropriate and provide written notice to implement the mitigation if accepted, otherwise it will state that the provider is precluded. The department will respond within 30 days of such a request.

The new §9.43(f) Appeals, prescribes the process of appeal of a preclusion decision to the executive director's designee following the process outlined in §9.7 of this chapter (related to Protest of Contract Practices or Procedures). This is the appeal process currently being used on professional contracts and other contracts within the department.

The new §9.43(g) provides that the department will publish additional guidance such as examples on the department's webpage. This will provide entities seeking contracts with the department additional insight to what the department is identifying as conflicts to ensure that they have the information necessary to make contracting decisions.

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

Martin Rodin, Director, Professional Engineer Procurement, 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

Martin Rodin 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 to prevent a provider or their employee who has a conflict of interest from participating in a procurement, assignment, or project, thus preventing an entity from fully representing the interests of the department due to competing obligations.

COSTS ON REGULATED PERSONS

Martin Rodin 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

Martin Rodin 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

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

SUBMITTAL OF COMMENTS

Written comments on the proposed new §9.43, 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 "Preclusion Rule" The deadline for receipt of comments is 5:00 p.m. on August 10, 2026. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed amendments, or is an employee of the department.

STATUTORY AUTHORITY

The new rule is proposed under Transportation Code, §201.101, which provides the commission with the authority to establish rules for the conduct of the work of the department, and more specifically, §223.041, regarding the use by the department of private sector professional services for transportation projects, Government Code, Chapter 2254, Subchapter A (Professional Services Procurement Act), which sets forth requirements for selection and contracting of architectural and engineering services, and Government Code §2261.260, which requires the department to adopt a policy for precluding private design professionals from providing services for the department.

The authority for the new rule is provided by House Bill 3989, 88th Regular Session, 2023. The primary author and the primary sponsor of that bill are Representative John Raney and Senator Carol Alvarado, respectively.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Government Code, Chapter 2254, Subchapter A (Professional Services Procurement Act), and §2261.260, and Transportation Code, §223.041.

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 June 24, 2026.

TRD-202602592

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 416-2037

CHAPTER 25. TRAFFIC OPERATIONS

SUBCHAPTER A. GENERAL

The Texas Department of Transportation (department) proposes the repeal of §25.3, concerning the installation of pay telephones.

EXPLANATION OF PROPOSED AMENDMENTS

Section 25.3, Installation of Pay Telephones, was adopted in 1976 and has not been amended. With the widespread use of cell phones, pay telephone usage has all but disappeared. All pay phones that were installed under this section have been removed. The department and the Texas Regulatory Efficiency Office have agreed that this section should be repealed because it is no longer necessary.

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 the Texas Transportation Commission's enforcing or administering the proposed rules.

LOCAL EMPLOYMENT IMPACT STATEMENT

James Stevenson, Maintenance Division Director, 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

James Stevenson 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 a more uniform use of traffic control devices statewide. This uniformity increases user comprehension and therefore improves safety and mobility for all users on all streets and highways open to public travel.

COSTS ON REGULATED PERSONS

James Stevenson 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

James Stevenson 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

James Stevenson 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 §25.1, 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 "Pay Telephones." The deadline for receipt of comments is 5:00 p.m. on August 10, 2026. 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 repeal is proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department.

CROSS REFERENCE TO STATUTE

None.

§25.3. Installation of Pay Telephones.

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 June 24, 2026.

TRD-202602594

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 416-3048

CHAPTER 31. PUBLIC TRANSPORTATION

The Texas Department of Transportation (department) proposes repeal of §§31.3, 31.16, and 31.57; new §31.3 and §31.57; and amendments to §§31.30, 31.31, 31.36, 31.40, and 31.43 - 31.50, all concerning the policies and procedures followed by the department in the administration of state and federal public transportation grant funds.

EXPLANATION OF PROPOSED AMENDMENTS, REPEALS, AND ENACTMENTS

This rulemaking is necessary to respond to recent changes to federal public transportation program requirements and state grant management standards. Additionally, the Texas Regulatory Efficiency Office (TREO), in its Regulatory Efficiency Review of the department, recommended several changes to the definitions in §31.3; this rulemaking updates and streamlines the department's rules, addresses TREO's recommendations, removes obsolete program references, and amends language governing the allocation of funding for federal 5310 and 5339 grant programs.

Repeal of §31.3, Definitions, and enactment of new §31.3, Definitions, is necessary due to extensive amendments to align with federal definitions, to streamline and clarify language, and to remove outdated definitions.

Repeal of §31.16, Section 5309 Grant Program, is necessary because the department is no longer responsible for administering the Section 5309 program beginning with the Moving Ahead for Progress in the 21st Century (MAP-21) Act. Section 5309 program funds received prior to MAP-21 have been expended and all federal grants the department administers are closed.

Amendments to §31.30, Section 5339 Grant Program, update FTA Circular references and clarify that funds remaining, unobligated, or returned after the initial distribution of program funds through the established formula may be used by the department in accordance with federal requirements.

Amendments to §31.31, Section 5310 Grant Program, include clarifications, reorganization, and an update to the award process. Subsection (c) is amended to clarify the department's role and oversight responsibilities as the designated recipient for all §5310 funds. Subsection (d) is amended to update terminology and streamline the definitions of eligible subrecipients and alternate eligible subrecipients.

Subsection (e) is amended to specify that the department will determine eligible expenses for federal reimbursement and match ratios in accordance with the applicable FTA Circular and that all expenses require department concurrence. Subsection (f) is amended to remove outdated language concerning local funding requirements. It is replaced with language establishing how the department will distribute §5310 program funds in a fair and equitable manner within the state in accordance with federal requirements. To maximize efficient use of available funds and streamline the award process, the department is moving to a competitive process for awarding funds rather than a formula allocation, as permitted by FTA program guidance. With this change, the language in subsection (g) regarding the allocation formula is no longer needed and is replaced with language moved from subsection (i) regarding public outreach. Subsection (h) is amended to update and clarify application requirements. Subsections (i), (j), and (k) are deleted as the language is no longer needed under the new competitive award process.

Amendments to §31.36, Section 5311 Grant Program, update FTA Circular references.

Amendments to §31.40, Public Involvement, remove references to obsolete federal programs under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA LU).

Amendments to §31.43, Contracting Requirements, streamline language by referencing the Texas Grant Management Standards.

Amendments to §31.44, Procurement Requirements, streamline language by referencing the Texas Grant Management Standards and update regulatory references. New subsection (b)(1)(C) adds a reference to the micro-purchase requirements in the Texas Grant Management Standards. New subsection (b)(1)(D) clarifies that formal solicitations must be conducted when procuring services requiring a professional license. New subsection (c)(1)(D) requires the subrecipient to provide to the department the determination that a winning bidder is a responsible entity. Existing subsection (c)(1)(D) is redesignated as (c)(1)(E).

Throughout §31.45, Accounting and Financial Recordkeeping Requirements, §31.46, Reimbursement Procedures, §31.47, Audit and Project Close-Out Standards, and §31.49, Transportation Needs of Clients of Health and Human Service Agencies and Coordination of Services, "contractor" is replaced with "subrecipient" to clarify requirements.

Amendments to §31.48, Project Oversight, streamline language regarding the collection of transit data from subrecipients and strike references to obsolete federal programs.

Amendments to §31.50, Record Keeping and Inventory Requirements, clarify that an accurate inventory is required to be maintained for all capital assets funded in whole or in part by state or federal funding, not just vehicles.

Repeal of §31.57, Disposition, and enactment of new §31.57, Disposition, is necessary because of extensive amendments and reorganization. The section is significantly streamlined by referencing existing federal requirements for disposition of property and ensuring consistency between state and federal requirements.

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

Mr. 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 an updated allocation of §5310 federal funds, clearly defined disposition processes, repeal of outdated TAC language and a simplification of chapter definitions.

COSTS ON REGULATED PERSONS

Mr. 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

Mr. 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) the rules will not create or eliminate a government program;

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

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

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

(5) the rules will not create a new regulation;

(6) the rules repeal an existing regulation;

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

(8) the rules will not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

Mr. 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 August 6, 2026, in the Duro Canyon Hearing Room, First Floor, Stassney Headquarters, 6230 E Stassney Ln, Austin, Texas and will be conducted in accordance with the procedures specified in 43 TAC §1.5. Those desiring to make comments or presentations may register starting at 8:30 a.m. Any interested persons may appear and offer comments, either orally or in writing; however, questioning of those making presentations will be reserved exclusively to the presiding officer as may be necessary to ensure a complete record. While any person with pertinent comments will be granted an opportunity to present them during the course of the hearing, the presiding officer reserves the right to restrict testimony in terms of time and repetitive content. Organizations, associations, or groups are encouraged to present their commonly held views and identical or similar comments through a representative member when possible. Comments on the proposed text should include appropriate citations to sections, subsections, paragraphs, etc. for proper reference. Any suggestions or requests for alternative language or other revisions to the proposed text should be submitted in written form. Presentations must remain pertinent to the issues being discussed. A person may not assign a portion of his or her time to another speaker. Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services such as interpreters for persons who are deaf or hearing impaired, readers, large print or Braille, are requested to contact the General Counsel Division, 125 East 11th Street, Austin, Texas 78701-2483, (512) 463-8630 at least five working days before the date of the hearing so that appropriate services can be provided.

SUBMITTAL OF COMMENTS

Written comments on the repeal of §§31.3, 31.16, and 31.57; new §31.3 and §31.57; and amendments to §§31.30, 31.31, 31.36, 31.40, and 31.43 - 31.50, 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 " Texas Administrative Code, Chapter 31 ". The deadline for receipt of comments is 5:00 p.m. on August 10, 2026. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed amendments, or is an employee of the department.

SUBCHAPTER A. GENERAL

STATUTORY AUTHORITY

The repeal is proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission (commission) with the authority to establish rules for the conduct of the work of the department, and more specifically, Transportation Code, §456.022, which authorizes the commission to adopt rules necessary to allocate state funding among eligible public transportation providers and §455.002, authorizing the department to receive grants from a governmental source for use in performing the department's public transportation functions.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Texas Transportation Code, Chapters 455 and 456

§31.3. Definitions.

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 June 24, 2026.

TRD-202602595

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 486-5997

STATUTORY AUTHORITY

The new section is proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission (commission) with the authority to establish rules for the conduct of the work of the department, and more specifically, Transportation Code, §456.022, which authorizes the commission to adopt rules necessary to allocate state funding among eligible public transportation providers and §455.002, authorizing the department to receive grants from a governmental source for use in performing the department's public transportation functions.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Texas Transportation Code, Chapters 455 and 456

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 June 24, 2026.

TRD-202602596

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 486-5997

SUBCHAPTER C. FEDERAL PROGRAMS

STATUTORY AUTHORITY

The repeal is proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission (commission) with the authority to establish rules for the conduct of the work of the department, and more specifically, Transportation Code, §456.022, which authorizes the commission to adopt rules necessary to allocate state funding among eligible public transportation providers and §455.002, authorizing the department to receive grants from a governmental source for use in performing the department's public transportation functions.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Texas Transportation Code, Chapters 455 and 456

§31.16. Section 5309 Grant Program.

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 June 24, 2026.

TRD-202602597

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 486-5997

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 state funding among eligible public transportation providers and §455.002, authorizing the department to receive grants from a governmental source for use in performing the department's public transportation functions.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Texas Transportation Code, Chapters 455 and 456

§31.30. Section 5339 Grant Program.

(a) Purpose. Title 49 U.S.C. §5339 authorizes the Secretary of the U.S. DOT to make grants for bus and bus facilities.

(b) Eligible recipients. Section 5339 funds are available to states and local public entities.

(c) Department role. The department acts as the designated recipient for §5339 grants to §5307 transit districts in small urbanized areas and §5311 rural transit districts.

(d) Small urban transit districts. The department will:

(1) allocate the available program funds so that each eligible recipient will receive a proportional share of available funding based on the [total] vehicle miles reported to the department on an annual basis with no eligible recipient receiving less than one percent of the amount available;

(2) notify the FTA of the results of the allocation calculations;

(3) notify the small urban transit districts of the results of the allocation calculations; and

(4) authorize the small urban transit districts to apply directly with the FTA for the funds, due to their status as direct recipients under the FTA §5307 program.

(e) Rural transit districts. The department will:

(1) allocate the available program funds so that each eligible subrecipient will receive a proportional share of available funding based on the [total] vehicle miles reported to the department on an annual basis with no eligible subrecipient receiving less than one percent of the amount available;

(2) develop application materials and disseminate information to eligible subrecipients;

(3) prepare the state's funding application and submit the application to the FTA for approval;

(4) negotiate and execute contracts with subrecipients;

(5) prepare requests for federal reimbursement and process payment requests from subrecipients;

(6) monitor and evaluate the progress of local projects, including compliance with federal regulations; and

(7) provide technical assistance to subrecipients as necessary.

(f) Eligible assistance categories. Eligible projects are those listed in FTA Circular 9040.1H [5100.1] or its latest version.

(g) Link to asset management plan. At such time as the department implements the requirement of a transit asset management plan, recipient or subrecipient projects must be linked to the asset management plan required by §31.51 of this chapter (relating to Asset Management) and 49 U.S.C. §5326.

(h) Reimbursement rates. For reimbursement:

(1) federal funds may be used to defray up to 80 percent of the cost of eligible capital expenditures;

(2) the federal share may increase to up to 85 percent of the net project cost for a project that involves acquiring vehicles for the purpose of complying with the Americans with Disabilities Act or the Clean Air Act; and

(3) the federal share may increase to up to 90 percent for incremental costs related to compliance with the Clean Air Act in areas of air quality non-attainment or with the Americans with Disabilities Act.

(i) Local share requirements. The non-federal share may be provided by:

(1) cash from state or local governments;

(2) cash from non-government sources other than revenues from providing public transportation services;

(3) revenues from the sale of advertising and concessions;

(4) an undistributed cash surplus, a replacement or depreciation cash fund or reserve, or new capital;

(5) service agreements with a state, local, or private social service organization; or

(6) transportation development credits.

§31.31. Section 5310 Grant Program.

(a) Purpose. Title 49 U.S.C. §5310 authorizes the Secretary of the U.S. DOT to make grants for the provision of transportation services meeting the special needs of seniors and individuals with disabilities. The governor has designated the department to administer the §5310 program.

(b) Goal and objectives. The department's goal in administering the §5310 program is to promote the availability of cost-effective, efficient, and coordinated passenger transportation services planned, designed, and carried out to meet the special needs of seniors and individuals with disabilities when public transportation is insufficient, inappropriate, or unavailable, using the most efficient combination of financial and other resources. To achieve this goal, the department's objectives are to:

(1) promote the development and maintenance of a network of transportation services for seniors and individuals with disabilities throughout the state, in partnership with local stakeholders;

(2) fully integrate the §5310 program with other federal, state, and local resources and programs that are designed to serve similar populations;

(3) promote public transportation projects that exceed the requirements of the Americans with Disabilities Act (ADA);

(4) promote public transportation projects that decrease the reliance of individuals with disabilities on ADA complementary paratransit services;

(5) promote and encourage local participation, especially by seniors and individuals with disabilities or their advocates, in decision-making;

(6) improve the efficiency, effectiveness, and safety of §5310 transit systems through the provision of technical assistance; and

(7) include private sector operators in the overall plan to provide transportation services for seniors and individuals with disabilities.

(c) Department role.

[(1)] The department acts as the designated recipient for all §5310 funds appropriated to the state and has oversight responsibility. [:]

[(2)] The department, however, recognizes the subrecipients as partners who shall retain control of daily operations. As the administering agency, the department will:

(1) [(A)] develop application materials and disseminate information to [prospective applicants and other] interested parties;

(2) [(B)] develop evaluation criteria and select projects for funding[, with input from local entities and local individuals, in accordance with the standards set forth in subsection (i) of this section];

(3) [(C)] prepare the state's annual program of projects and funding application and submit that material to the FTA for approval;

(4) [(D)] negotiate and execute contracts with local §5310 subrecipients [recipients];

(5) [(E)] prepare requests for federal reimbursement and process payment requests from §5310 subrecipients [recipients];

(6) [(F)] monitor and evaluate the progress of ongoing transportation operations, including compliance with federal regulations and coordination of services; and

(7) [(G)] provide technical assistance to §5310 subrecipients [recipients] to aid them in improving and coordinating transit services.

(d) Eligible subrecipients [recipients].

(1) Eligible subrecipients include [existing] rural transit districts and urban transit districts serving a population of less than 200,000. [,] Additional eligible entities include local public entities, private non-profit organizations, and state and local government authorities[, and other transit service providers] that coordinate services for seniors and individuals with disabilities[, or private taxi companies that provide shared-ride taxi service to the public or to special categories of users (such as seniors or individuals with disabilities) are eligible recipients of funds].

(2) For an area included in a rural or urban transit district's service area for which the existing transit district is not willing or able to provide the transportation, the director may choose an alternate eligible subrecipient [a local public entity or a private organization as a] to receive §5310 funds. [Private taxi companies that provide shared-ride taxi service to the public or to special categories of users (such as seniors or individuals with disabilities) on a regular basis are also eligible recipients.] Any subrecipients [recipients] that is not a transit district shall coordinate §5310 service with the existing transit district to ensure service is complementary to and not competitive with existing services.

(e) Eligible expenses [assistance categories]. The department will determine [following categories of expenses are] eligible expenses for federal reimbursement and match ratios in accordance with the FTA Circular 9070.1H or its most current version. All expenses require department concurrence [under the §5310 program].

(h) Application [requirements]. Prior to receiving funds, a subrecipient must complete and comply with all application requirements, rules, and regulations applicable to the §5310 program. A complete application must be submitted by a specified time and in a form prescribed by the department. [A prospective applicant must submit an application for §5310 grant funds at the time specified by the department.] The application must demonstrate [document] the need and demand for passenger transportation services for seniors and individuals with disabilities, and also must document inclusion of the project in the local coordinated public transit-human service transportation plan.

§31.36. Section 5311 Grant Program.

(a) Purpose. Section 5311, Federal Transit Act (49 U.S.C. §5311), authorizes the Secretary of the U.S. DOT to make grants for public transportation projects in rural areas. The department has been designated by the governor to administer the §5311 program.

(b) Goal and objectives. The department's goal in administering the §5311 program is to promote the availability of cost-effective, efficient, and coordinated passenger transportation services to the general public in rural areas using the most efficient combination of financial and other resources. To achieve this goal, the objectives of the department are to:

(1) promote the development and maintenance of a network of general public transportation services, including intercity services, in rural areas throughout the state, in partnership with local officials;

(2) fully integrate the §5311 program with other federal, state, and local resources that are designed to serve rural populations;

(3) improve the efficiency, effectiveness, and safety of §5311 systems through the provision of technical assistance;

(4) include private sector operators in the overall plan to provide public transportation services; and

(5) minimize negative impacts from changes in public transportation district boundaries.

(c) Department role. The department acts as the designated recipient for all §5311 funds apportioned to the state and has an oversight responsibility for all rural transit services within the state. The department, however, recognizes the subrecipients as partners who shall retain control of daily operations. As the administering agency, the department will:

(1) develop application materials and disseminate information to prospective applicants and other interested parties;

(2) allocate the available program funds in a fair and equitable manner as described in subsection (f) of this section (the department will not provide §5311 funds to more than one transit system in a geographical area);

(3) develop evaluation criteria and select projects for funding;

(4) prepare the state's annual program of projects and funding application and submit that material to the FTA for approval;

(5) negotiate and execute contracts with local §5311 subrecipients;

(6) prepare requests for federal reimbursement, and process payment requests from §5311 subrecipients;

(7) monitor and evaluate the progress of ongoing transportation operations, including compliance with federal regulations; and

(8) provide technical assistance to §5311 subrecipients to aid them in improving transit services.

(d) Eligible subrecipients. State agencies, local public entities, private nonprofit organizations, Native American tribes and organizations, and operators of public transportation services are eligible to receive §5311 funds through the department. Private for-profit operators of public transportation services may participate in the program through contracts with eligible subrecipients. An entity must be a rural transit district to receive §5311 funds except that private for-profit operators of public transportation services and entities that are not rural transit districts are eligible to receive §5311 funds through the department under the intercity bus program, as set forth in subsections (f)(2) and (h) of this section.

(e) Eligible expenses. The department will follow FTA Circular 9040.1H [9040.1G], or its latest version, to determine eligible §5311 program expenses.

(f) Allocation of funds. As part of its administration of the §5311 program, the department is charged with ensuring that there is a fair and equitable distribution of funds within the state (FTA Circular 9040.1H [9040.1G] or its latest version). After receipt of annual §5311 program apportionment totals, the department will allocate §5311 funds in the following manner and order.

(1) State Administration. The department will use not more than 10 percent of the annual federal apportionment to defray its expenses incurred for the administration of the §5311 program.

(2) Intercity bus allocation. Unless the chief executive officer of the state or the executive officer's authorized designee certifies to the Secretary of the U.S. DOT that the intercity bus service needs of the state are being adequately met, the department will allocate not less than 15 percent of the annual §5311 federal apportionment for the development and support of intercity bus transportation facilities and services providing access and connections to rural areas. If it is determined that all or a portion of the set-aside monies is not required for intercity bus service, those funds will be applied to the formula apportionment process described in paragraph (4) of this subsection. Procedures for determining if a certification of adequacy is warranted are as follows.

(A) The department will review all data on intercity bus service availability, including outstanding requests from intercity operators and rural transit districts, and levels of service.

(B) The department will consult with affected intercity bus service providers and rural transit districts.

(C) Based on the findings of subparagraphs (A) and (B) of this paragraph, the commission, the governor or the governor's authorized designee may certify to the adequacy of intercity bus service.

(3) Discretionary allocation. After the allocation of funds under paragraphs (1) and (2) of this subsection, up to 10 percent of the remaining funds will be available to the commission for award at any time during the fiscal year on a pro rata basis, competitively, a combination of both pro rata basis and competitively, or as a one-time award. Funds may be used to address rural 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 as determined by the commission.

(4) Rural Transit District Total Allocation. Excluding the amounts allocated under paragraphs (1), (2), and (3) of this subsection, the commission will allocate to rural transit districts in accordance with this paragraph the balance of the annual §5311 federal apportionment and any program funds that were available for award in the previous fiscal year under paragraph (3) of this subsection but not awarded.

(A) Subrecipients will receive a baseline allocation. The amount of a subrecipient's baseline allocation is the amount of §5311 funds that the subrecipient received for federal Fiscal Year 2021 and will not be reduced by the performance adjustment under paragraph (5) of this subsection.

(B) Each rural transit district will receive a subrecipient growth allocation amount based on proportional share using the following criteria:

(i) population of the district - 50 percent;

(ii) land area of the district - 25 percent;

(iii) [total] vehicle miles in the district - 15 percent; and

(iv) number of low-income individuals residing in the district - 10 percent.

(C) For the purposes of subparagraph (B)(i) of this paragraph, population is determined using the most recent federal decennial census except that beginning September 1, 2027, the director may choose to use population information from the Texas Demographic Center for periods between the publication of federal decennial census information.

(5) Performance Adjustment. The total allocation computed for a rural transit district under paragraph (4) of this subsection is subject to adjustment for performance in accordance with this paragraph, except as provided by subparagraph (A) of that paragraph.

(A) The performance measures used for performance adjustments under this paragraph are:

(i) the rural transit district's ridership increasing by two percent or more; and

(ii) the district's operating costs per [total] vehicle hour [hours] not exceeding the annual average of those costs for the district, plus one standard deviation, computed over a 10-year period but excluding any year in which a federal major disaster declaration was applicable to the district.

(B) For each performance measure not achieved, a rural transit district's total allocation will be reduced by five percent.

(C) A rural transit district that achieves both performance measures will receive an additional allocation amount computed by dividing the total amount of reductions for all under subparagraph (B) of this paragraph by the total number of rural transit districts that achieve both performance measures.

(D) The director, in any year, may waive the application of the performance adjustment under this paragraph to a rural transit district or a 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.

(6) Census Adjustment.

(A) If part of a transit district's service area is changed due to declaration by the United States Census Bureau or the service area is otherwise altered, the department and that subrecipient shall negotiate an appropriate adjustment in the funding year or any subsequent year, using population and land area factors.

(B) If a previously designated urbanized area is declared rural by the United States Census Bureau, a public transportation subrecipient serving that area must apply for funds in accordance with paragraph (7) of this subsection.

(7) Application and contract. Prior to receiving funds a subrecipient must complete and comply with all application requirements, rules, and regulations applicable to the §5311 program. A completed application must be submitted, in a form prescribed by the department, and document the need and demand for general public passenger transportation services. A contract shall be for no less than 12 months unless authorized by the department.

(8) Review of Allocation Provisions. Prior to allocating §5311 funds for FY 2028, the department will review the allocations of §5311 funds for the preceding five fiscal years to determine whether paragraphs (1) - (5) of this subsection need to be adjusted for the fair and equitable distribution of those funds for FY 2028.

(g) Program of projects. All projects for a fiscal year will be identified in accordance with the allocation rules included in subsection (f) of this section. After commission approval of the allocation, these projects will be submitted to the FTA as the annual program of projects for the fiscal year.

(h) Intercity bus program solicitations. For funding from allocations made under subsection (f)(2) of this section, request for proposals will be issued for projects complying with FTA definitions of intercity bus transportation. To ensure a balanced investment in access and connectivity to intercity bus travel, the department may establish investment targets among eligible applicant groups or project types prior to solicitation of project proposals.

(i) Federal emergency relief funds. If federal emergency relief funds are apportioned to the department through the §5311 program, the commission will distribute those funds in a manner consistent with relief funding objectives.

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 June 24, 2026.

TRD-202602598

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 486-5997

SUBCHAPTER D. PROGRAM ADMINISTRATION

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 state funding among eligible public transportation providers and §455.002, authorizing the department to receive grants from a governmental source for use in performing the department's public transportation functions.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Texas Transportation Code, Chapters 455 and 456

§31.40. Public Involvement.

Recipients of state and federal public transportation funds through the department, as applicable, shall:

(1) satisfy the certification requirements of 49 U.S.C. §5310(e)(2)(A)--Project Selection and Plan Development, Enhanced Mobility of Seniors and Individuals with Disabilities Program; and]

(2) [satisfy the certification requirements of 49 U.S.C. §5316(g)(3)(B)--Project Selection and Planning, Job Access and Reverse Commute Program, as governed by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU);]

[(4)] provide the annual FTA certifications and assurances.

§31.43. Contracting Requirements.

(a) Purpose. This section describes contracting standards and related requirements for recipients of state and federal public transportation grant funds.

(b) Standards. The standards contained in 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards apply to public transportation contracting activities. The department will monitor subrecipient compliance with those standards.

(c) Subcontracts. Subrecipients shall furnish to the department notice of the intent to award a purchase order or contract to any individuals or organizations not a part of the subrecipient's organization when awarded as a result of [the amount of the purchase meets or exceeds the threshold level in the Government Code or Local Government Code (or greater than $25,000 for those entities not covered by the Government Code or Local Government Code) requiring] formal competitive procurement as required by the Texas Grant Management Standards. Purchases shall not be split out to stay below the threshold amount. No subcontract will relieve the subrecipient of the subrecipient's legal responsibilities to the department.

§31.44. Procurement Requirements.

(a) Purpose. This section describes procurement standards and related requirements for recipients of state and federal public transportation grant funds.

(b) Standards. The standards contained in 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, apply to public transportation procurement activities. All subrecipients shall maintain written procurement policies. Those policies shall, at a minimum, provide the following.

(1) Goods, services and equipment purchases.

(A) Goods, services, or equipment requiring formal competitive procurement in accordance with the Texas Grant Management Standards [in accordance with the applicable provisions in the Government Code or Local Government Code (greater than $25,000 for those entities not covered by the Government Code or Local Government Code) shall] require sealed bids or proposals. [Bids for computer and radio systems shall include all subcomponents necessary for the system to be operated in the unit cost. Exceptions will be allowed for those entities that are eligible to purchase items through the state open contract procedures.]

(B) Goods, services, or equipment not requiring formal competitive procurement require prices or rate quotations from an adequate number of qualified entities in accordance with the Texas Grant Management Standards [in accordance with the applicable provisions in the Government Code or Local Government Code ($25,000 or less for those entities not covered by the Government Code or Local Government Code) do require the solicitation of quotes or offers from at least three sources].

(2) Real property.

(A) Acquisition of real property shall be accomplished in accordance with federal and state statutes, regulations, and policies. In particular, projects that receive federal funds shall comply with the uniform relocation and real property acquisition standards established in 49 C.F.R. Part 24 [25].

(B) Specific standards for construction and rehabilitation projects will be negotiated as part of the project agreement between the department and the subrecipient.

(3) Records retention. All procurement documents are public information and shall be maintained by the subrecipient for at least three years after grant closeout, or, in the case of a capital project, the life of the asset plus three years.

(c) Department role.

(1) Oversight and concurrence [approval]. The subrecipient shall furnish the department notice of the intent to award a purchase order or contract to any individuals or organizations not a part of the subrecipient's organization when awarded as a result of [the amount of the purchase meets or exceeds the threshold level of the in the Government Code or Local Government Code (or greater than $25,000 for those entities not covered by the Government Code or Local Government Code) requiring] formal competitive procurement as required by the Texas Grant Management Standards. Purchases shall not be split out to stay below the threshold amount. The subrecipient shall at a minimum provide the following documentation as requested by the department describing the procurement history:

(A) the rationale the subrecipient used for the method of procurement;

(B) the rationale the subrecipient used for the selection of contract type;

(C) the justification for selecting the bidder or proposer; [the reasons the bidder or proposer was selected; and]

(E) [(D)] the methodology used to determine the contract price, including a cost justification.

(2) Technical assistance. The department will provide vehicle specifications, guidance on competitive procurement procedures, and assistance in developing procurement documentation to a subrecipient upon request. If subrecipients choose to develop their own specifications, they assume full responsibility for ensuring that the specifications do not restrict competition.

§31.45. Accounting and Financial Recordkeeping Requirements.

(a) Purpose. This section describes accounting and financial recordkeeping standards and related requirements for recipients of state and federal public transportation grant funds.

(b) Standards. The subrecipient's [contractor's] financial management system shall meet or exceed the requirements of 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Those requirements include:

(1) accurate, current, and complete disclosure of the financial transactions of each grant program in accordance with state and federal reporting requirements;

(2) records that identify adequately the source and application of funds for grant-supported activities (records shall contain information pertaining to grant awards and authorization, obligations, commitments, assets, liabilities, outlays, and income);

(3) effective control over and accountability for all funds, property, and other assets (the recipient shall adequately safeguard all assets and shall assure that they are used solely for authorized purposes);

(4) comparison of actual with budgeted amounts for each contract, and relation of financial information to performance or productivity data, including the production of unit cost information;

(5) procedures for determining the eligibility for reimbursement and proper allocation of cost;

(6) accounting records that are supported by source documentation; and

(7) a systematic method to assure timely and appropriate resolution of audit findings and recommendations.

§31.46. Reimbursement Procedures.

(a) Purpose. This section describes reimbursement procedures for recipients of state and federal public transportation grant funds.

(b) Subrecipient [Contractor] responsibilities. Unless the department provides written authorization to the contrary, the subrecipient [contractor] shall:

(1) submit reimbursement requests in a timely fashion, with all supporting documentation as required by the department and specified in the project agreement;

(2) submit a final project billing within 45 days of the termination date specified in the project agreement; and

(3) make payments promptly to subcontractors and suppliers, and failure to do so shall be grounds for termination of the grant contract by the department. The [(the] department shall not be responsible for the debts of the subrecipient [contractor)].

(c) Department responsibilities. The department will reimburse subrecipients [contractors] within 30 days of the receipt of properly prepared and documented requests for payment. Payment is contingent upon the availability of federal and state appropriated funds.

§31.47. Audit and Project Close-Out Standards.

(a) Purpose. This section describes audit and close-out requirements for recipients of state and federal public transportation grant funds.

(b) Audit standards. Subrecipient [Contractor] audit procedures shall meet or exceed the single audit report requirement of 2 C.F.R. Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

(1) Access. The United States Secretary of Transportation, the Comptroller General of the United States, the executive director of the department, and the State Auditor, and any of their authorized representatives, shall have access to the financial and other project records at all reasonable times during the contract period and for the record retention period for the purpose of making audits, examinations, excerpts and transcripts.

(2) Documentation. The subrecipient [contractor] shall maintain financial records, supporting documents, statistical records, and all other records of the public transportation grant.

(3) Records retention. Financial records, supporting documents, statistical records, and all other records of the public transportation grant shall be retained for a period of three years after grant closeout, with the following qualifications.

(A) Litigation. If any litigation, claim, or audit is started before the expiration of the three-year period, the records shall be retained until all litigations, claims, and audit findings involving the records have been resolved.

(B) Nonexpendable property. Records for nonexpendable property acquired with federal or state funds shall be retained for three years after its final disposition.

(C) Transfer of records. The three-year retention requirement is not applicable to the subrecipient [contractor] when the records are transferred to or maintained by the federal or state grantor agency.

(D) Procurement records. The three-year retention requirement is not applicable to capital projects covered under §31.44(b)(3) of this chapter.

(4) Project close-outs. The subrecipient [contractor] shall make every reasonable effort to complete all project activities and request appropriate reimbursements within the time period specified in the project agreement. Project audits shall also be completed within the specified time period and any findings resolved with all practicable speed. Upon completion of these activities, the subrecipient [contractor] shall provide the department written notification of project close-out and the release of any unspent project balances.

§31.48. Project Oversight.

(a) Purpose. This section describes reporting requirements for designated recipients and subrecipients of state or federal public transportation grant funds and monitoring activities to be performed by the department.

(b) Reporting requirements. The subrecipient shall submit reports to the department in a format prescribed by the department within deadlines established by the department.

(1) Incident reports. Subrecipients shall report all incidents that meet criteria established by the department. The subrecipient shall submit the report within five days of the incident or discovery of the incident.

(2) Asset inventory. Each subrecipient shall provide information on state and federally funded equipment as described in §31.50 of this chapter (relating to Recordkeeping and Inventory Requirements).

(3) Charter service. Section 5311 subrecipients shall provide charter service only under the specific circumstances established by the FTA. Operators shall advise the department of any charter service provided and the exemption under which charter service is provided.

(4) Disadvantaged Business Enterprises. Subrecipients shall submit reports in accordance with 49 C.F.R. Part 26, Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs.

(5) Operations reports. All FTA recipients and subrecipients shall submit quarterly and annual operations reports.

(A) Pursuant to the requirements of 49 U.S.C. §5311 and §5335, subrecipients of assistance under §5311 shall submit to the department data required by the department for reporting to the National Transit Database.

(B) Pursuant to the requirements of 49 U.S.C. §5326, subrecipients of FTA assistance through the department shall provide the data required by the department to report on transit asset management.

(C) Pursuant to the requirements of Transportation Code, §456.008[(a) and (b)] and the applicable federal programs, the department will collect monthly, and publish annually, data from transit operators in rural and urbanized areas, including transit authorities, and public transportation providers as defined in Transportation Code §461.002 that receive funding under 49 U.S.C. §5310 [and publish annually data] on industry utilized standards that best reflect ridership, mileage, revenue by source and service effectiveness. [These standards include:]

(6) Significant events. The recipient shall promptly advise the department in writing of events that have a significant effect on the delivery of public transportation services, including:

(A) problems, delays, and adverse conditions that will materially affect the ability to attain program objectives, prevent the meeting of time schedules and goals, or preclude the attainment of project work units by established time periods, accompanied by a statement of the action taken or contemplated and any departmental assistance needed to resolve the situation; and

(B) favorable developments and events that will enable meeting time schedules and goals sooner than anticipated or producing more work units than originally projected.

(7) Miscellaneous reports. Entities receiving funds from either the department or the FTA shall cooperate with the department in providing other information as requested by state and federal funding agencies.

(c) Department monitoring. The department will rely on subrecipient reports as described in subsection (b) of this section as the primary means of monitoring subrecipient performance. In addition, department personnel and the subrecipient at least quarterly will discuss problems encountered by the subrecipient, the subrecipient's need for technical assistance, and other topics related to the provision of public transportation services. Routine monitoring activity will occur in the following areas according to a schedule that accommodates federal deadlines and department and operator workloads. Most, but not all, monitoring activities will occur on a quarterly basis.

(1) Civil rights. The department will monitor subrecipients for compliance with Title VI Civil Rights requirements.

(2) Drugs and alcohol.

(A) Each §5311 subrecipient and each of its subcontractors with safety-sensitive employees shall have policies and programs in place that comply with drug and alcohol standards established by the FTA. The department will monitor subrecipients for compliance with these regulations. In addition, the FTA requires each subrecipient to file a calendar year report (January 1 - December 31) with the department on drug and alcohol testing and compliance activities.

(B) Each §5310 subrecipient[, and each §5316 and §5317 subrecipients with regard to the grant of funds appropriated under federal authorization bills prior to MAP-21,] shall comply with Federal Motor Carrier Safety Administration requirements for drug and alcohol compliance if it owns a vehicle that requires a commercial driver's license to operate. If the subrecipient also receives §5307 or §5311 funding, the subrecipient shall include §5310 [§§5310, 5316, and 5317] employees in their FTA testing program.

(3) Fiscal responsibility. A department employee quarterly will review agency financial records that support requests for payment.

(4) Insurance. Subrecipients of state or federal funds through the department shall insure all facilities, equipment, and vehicles from loss. Checks for appropriate insurance levels will occur at the time the local agency renews its policies.

(5) Maintenance. Subrecipients are required to have written maintenance plans, schedules, and logs to ensure the proper care and longevity of vehicles and facilities in accordance with §31.53(d) of this chapter (relating to Maintenance Requirements). The plans, schedules, and logs are subject to periodic on-site inspection by the department.

(6) Incidental vehicle use. A vehicle purchased with federal or state funds may be used for incidental uses that do not conflict with the primary purposes for which the vehicle was purchased. An example of permissible incidental use is using the vehicle for other public transportation activities when it is not required for project purposes. The vehicle shall not be altered in any way to accommodate an incidental use.

(7) Procurement. The department will work with subrecipients to ensure that procurement activities meet applicable state and federal requirements and that all required documents are received and actions completed in a timely manner. Check sheets will be maintained by the department to ensure all benchmark activities are accomplished in the proper sequence.

(d) Noncompliance. A subrecipient that fails to comply with federal or state law, standard or special grant or subgrant conditions, or contractual agreements on which the grant or subgrant award is predicated, is subject to actions under Chapter 9, Subchapter H of this title (relating to Grant Sanctions).

§31.49. Transportation Needs of Clients of Health and Human Service Agencies and Coordination of Services.

(a) Purpose. This section describes requirements for addressing the transportation needs of clients of health and human service agencies and for the coordination of services between recipients of state and federal public transportation grant funds and other transportation operators.

(b) Planning for client transportation.

(1) The department will consider and will encourage metropolitan planning organizations to consider the transportation needs of persons who are clients of health and human services agencies in the planning processes performed under Chapter 16, Subchapter B, of this title (relating to Transportation Planning).

(2) An applicant for state or federal financial assistance under this chapter must submit evidence of coordination efforts to the department. This evidence must include a certification that, whenever possible, and to the maximum extent feasible, the existing network of transportation providers, and in particular the fixed route components of public transportation systems, will be used to meet the client transportation requirements of the state's social service agencies and their clients.

(3) The department will encourage, to the maximum extent possible, state health and human services agencies to base their transportation funding decisions on the recommendations that result from the:

(A) planning processes described under paragraph (1) of this subsection; and

(B) evidence of coordination efforts submitted under paragraph (2) of this subsection.

(c) Standards. Subrecipients [Contractors] shall at all times coordinate the provision of public transportation services with other transportation operators, both public and private, in the local area. Subrecipients [Contractors] shall furnish the department copies of any coordination agreements or other documents that demonstrate a good faith effort to reduce duplication of effort while improving the efficiency and effectiveness of transit services to the public. The department may suggest coordination efforts and may direct state and federal grant funding towards that end.

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 June 24, 2026.

TRD-202602599

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 486-5997

SUBCHAPTER E. PROPERTY MANAGEMENT STANDARDS

STATUTORY AUTHORITY

The amendments and new rule 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 state funding among eligible public transportation providers and §455.002, authorizing the department to receive grants from a governmental source for use in performing the department's public transportation functions.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Texas Transportation Code, Chapters 455 and 456

§31.50. Recordkeeping and Inventory Requirements.

(a) Purpose. To protect the public investment in real property and equipment purchased in whole or in part with state or federal public transportation funds administered by the department, subrecipients shall comply with the standards described in this section.

(b) Property records. The subrecipient shall maintain records that include:

(1) a description of the property;

(2) a serial number or other identification number; Passages with "Accountable executive"

(3) the source of the property;

(4) who holds title;

(5) the acquisition date and cost of the property;

(6) the percentage of state and the percentage of federal participation in the cost of the property;

(7) the location, use, and condition of the property; and

(8) any ultimate disposition data, including the date of disposal and sale price of the property.

(c) Inventory. The subrecipient shall cooperate with department representatives in performing at least once every two years a physical inventory of all real property[,] and equipment, as defined in §31.3 of this chapter, purchased in whole or in part with state or federal capital funds administered by the department. However, during the time period between these physical inventories, the subrecipient shall promptly notify the department in writing of all changes in the status of that real property and equipment in order that department records may be kept current. On or before November 1 of each year the subrecipient shall provide the department with an accurate inventory of capital assets funded in whole or in part by state or federal funds administered by the department [, including the mileage, of all vehicles used in public transportation service]. Property shall remain on the department's and subrecipient's inventories until such time as the property is formally disposed of in accordance with the requirements outlined in §31.57 of this subchapter. Notwithstanding the foregoing, the subrecipient shall, where applicable, be bound by, and shall comply with, the inventory requirements specified in 2 C.F.R Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

(d) Control system. The subrecipient must develop a control system to ensure adequate safeguards to prevent loss, damage, or theft of the property. The subrecipient shall investigate any loss, damage, or theft.

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 June 24, 2026.

TRD-202602600

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 486-5997

STATUTORY AUTHORITY

The repeal is proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission (commission) with the authority to establish rules for the conduct of the work of the department, and more specifically, Transportation Code, §456.022, which authorizes the commission to adopt rules necessary to allocate state funding among eligible public transportation providers and §455.002, authorizing the department to receive grants from a governmental source for use in performing the department's public transportation functions.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Texas Transportation Code, Chapters 455 and 456

§31.57. Disposition.

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 June 24, 2026.

TRD-202602601

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: August 9, 2026

For further information, please call: (512) 486-5997