Part 1.
TEXAS DEPARTMENT OF TRANSPORTATION
Chapter 5.
FINANCE
Subchapter E. PASS-THROUGH FARES AND TOLLS
43 TAC §§5.51 - 5.59
The Texas Department of Transportation (department) adopts
amendments to §§5.51 - 5.59, concerning pass-through fares and tolls.
The amendments to §§5.51 - 5.57 and 5.59 are adopted without changes
to the proposed text as published in the February 10, 2006, issue of the
EXPLANATION OF ADOPTED AMENDMENTS
House Bill 2702, 79th Legislature, Regular Session, 2005, amended Transportation
Code, §222.104, which governs agreements providing for pass-through tolls.
Transportation Code, §222.104, requires changes to the rules to address
the new statutory provisions allowing pass-through toll payments made by a
public or private entity to the department and addresses additional subjects
that can be included in an agreement providing for pass-through tolls. House
Bill 2702 also added Transportation Code, §91.075, to allow the payment
of pass-through fares on railway projects.
In addition, the department has now entered into several pass-through agreements
under its current rules. Practical experience with these agreements has suggested
ways in which the rules may be improved, so amendments are desirable to reflect
that experience.
Section 5.51 is amended to include the new statutory language adding design,
development, and financing as subjects suitable for a pass-through agreement.
Section 5.51 is also amended to reference new Transportation Code, §222.104(c),
which allows the department to receive a pass-through toll payment from a
public or private entity. In addition, §5.51 is amended to reference
new Transportation Code, §91.075(b), which allows pass-through fares
on railway projects.
Section 5.52, concerning Definitions, is revised to add new definitions,
delete definitions that are no longer necessary, and amend existing language.
Paragraph (3) is amended to generalize the definition of department estimate
so it will apply equally whether the department is paying or receiving pass-through
tolls or fares.
For the same reason, paragraph (4) is amended to delete the definition
of developer. Throughout the amended rules, the term developer is replaced
by the term public or private entity.
New paragraph (6) is added to clarify that references to a highway include
facilities necessary or convenient to the highway's construction.
New paragraph (8) is added to define the term pass-through agreement. The
use of this term allows general references that will address both pass-through
tolls and pass-through fares.
New paragraph (9) is added to define the term pass-through fare. The definition
establishes that the term includes both passenger and freight rail and encompasses
fares, surcharges, and user fees. Otherwise, the definition tracks the statutory
language.
New paragraph (10) is amended so the definition of pass-through toll will
more closely track the statutory language.
New paragraph (11) is added to define the phrase public or private entity,
which is used throughout the rules to identify the entity with which the department
may enter a pass-through agreement. This phrase replaces the term developer,
which is used in the current rules, and is no longer appropriate because the
law now allows the department to be the entity that develops a project.
New paragraph (12) is added to define railway so that it includes both
passenger and freight rail and any facility in connection with a railway.
This definition is essential to achieving the purpose of House Bill 2702 in
allowing pass-through fares on any railway project.
Section 5.53(a), paragraph (1) is amended to require submission of a project
location map with the public or private entity's proposal. Experience has
shown that a project location map is extremely useful to the department in
evaluating proposals.
Section 5.53(a), paragraph (5) is amended to clarify that experience in
developing highway projects is only relevant if the pass-through agreement
is for a highway project. Section 5.53(a), new paragraph (6) is added to impose
a corresponding requirement for a statement of experience with regard to a
pass-through agreement for a railway project. Subsequent paragraphs are renumbered.
Section 5.53(a), renumbered paragraph (7) is amended to clarify that information
on development experience is unnecessary if the proposer will not be the one
developing the project.
New paragraph (8) is added to address the corresponding situation in which
the project will be developed by the department and the proposer will be making
payments; the proposer must then provide information sufficient to show the
proposer's ability to make the promised payments.
Section 5.53(a), paragraph (10) is amended to clarify that information
on tolling is only necessary and relevant if the project will be for a highway.
Section 5.53(a), paragraph (11) is amended to clarify that information
about the proposer's intention to enter a comprehensive development agreement
is only necessary and relevant if the project will be for a highway.
Section 5.53(c) is amended to distinguish between highway and railway projects.
For highway projects, the relevant citation for comprehensive development
agreements is 43 TAC Chapter 27, while the corresponding citation for comprehensive
development agreements for railway projects is 43 TAC Chapter 7.
Section 5.54 is amended to improve the grammatical construction. In addition,
the amendments clarify that the initial approval by the Texas Transportation
Commission (commission) permits the executive director to negotiate financial
terms of a pass-through agreement, but that the detailed agreement itself
will be negotiated after final commission approval of the financial terms.
The amendments to paragraphs (3), (7), (8), and (9), clarify when certain
requirements are only relevant to highway projects and impose corresponding
requirements for railway projects. Paragraph (10) is amended to require additional
information about the proposer's financial capability when the department
will be constructing a project in reliance on future pass-through payments
from the proposer.
Section 5.55(c) is amended to recognize that some of the listed factors
will not be relevant to all pass-through agreements and to add the financial
capability of the proposer as one of the criteria to be considered in evaluating
proposals.
Section 5.55(g) is amended to recognize that the department cannot know
in advance whether negotiations will be successful.
Section 5.56(a) is amended to reflect that at the time of commission approval,
the department and the proposer will have negotiated the financial terms of
the agreement, but may not have reached agreement on every word of a contract.
Final commission authorization will be based on various criteria, including
the new criterion that the project will serve the public interest and not
merely a private interest. This criterion is added to ensure that the public
interest is always paramount, particularly when a private entity is the proposer.
Section 5.56, new subsection (b), is added to list the required terms of
any pass-through agreement. These terms combine in one place various terms
that were previously implicit in several rules or were located in former §5.58(e).
Experience with the pass-through mechanism has indicated that it is possible
and desirable to combine the financial terms and project development terms
in a single legal document. The list of matters that must be addressed in
a pass-through agreement also includes items that have been shown through
experience to be useful, such as a map of the project, a project schedule,
and an estimated project budget.
Section 5.57, new subsection (a), is added to provide a method for calculating
pass-through fares for railway projects. In concept, the methodology is similar
to and runs parallel to the methodology used to establish pass-through tolls
and considered in more detail in connection with new subsection (b). Subsection
(a)(2)(B) allows pass-through fares to be calculated on any reasonable basis,
including number, type, and class of passengers; type of freight; tonnage
of freight; number or type of cars; mileage traveled; or characteristics of
track. This flexibility is essential to allow pass-through fares to be tailored
to the particular circumstances of a given railway.
New subsection (b)(1) of §5.57 is amended to clarify the standards
to be considered by the commission in establishing the level of pass-through
tolls. This includes rewording to improve the structure and clarity of the
standards. One standard is added to ensure that the commission considers any
benefit from the more rapid construction of a project. Amendments to this
paragraph also clarify that the commission will not approve a level of pass-through
tolls that exceed the department's cost estimate except by an amount equal
to the savings realized through earlier construction of the project. Finally,
the amended paragraph establishes that the commission will not compensate
a public or private entity for its financing costs. As a whole, the amendments
to new subsection (b)(1) establish necessary parameters that are designed
to encourage the proper use of pass-through tolls while curbing demands that
could result in excessive expenditures from the state highway fund.
Section 5.57(b)(2) is amended to improve the clarity of its original meaning
by improving the grammatical structure. Paragraph (2), subparagraph (B) is
rewritten to generalize the types of pass-through toll that will be allowed
and to add whether the highway is tolled as a possible basis for varying pass-through
toll payments. Paragraph (3) is rewritten to clarify the existing procedure
with regard to overruns and underruns and to add a corresponding provision
governing overruns and underruns when a project will be developed by the department.
The provision governing overruns and underruns when a project will be developed
by the department places the risk of overruns and underruns on the public
or private entity unless the commission directs otherwise. Paragraph (3),
subparagraph (B) rewrites the provision governing traffic volume to clarify
the existing procedure.
Section 5.58(a) is amended to permit department, rather than commission,
approval of environmental review. This allows projects to proceed expeditiously
after receiving the commission's final approval of financial terms. New subsection
(b) is added to establish procedures for right of way acquisition and the
adjustment of utilities. In general, a public or private entity is required
to follow the same procedures as would apply to the department. For right
of way acquisition, alternative procedures may be approved if it would be
sufficient to meet legal requirements.
Section 5.58, new subsection (c), is amended to make explicit that the
standards in the former rule are intended for application to highway projects
under the former rule and to establish design criteria for railway projects.
The design criteria for railway projects are comparable in scope and nature
to the preexisting design criteria for highway projects. Former subsection
(c) is deleted because the specific provisions previously considered for a
separate project development agreement will now be handled in a single pass-through
toll agreement. This provides for a single definitive legal document and thus
reduces the department's legal risk, and it also reflects the department's
successful experience to date in negotiating pass-through agreements that
are complete and comprehensive.
Section 5.59 is amended to clarify the distinction between the standards
applicable to highways and those applicable to railways. New subsection (d)
is added to establish maintenance standards for railways. The railway maintenance
standards are comparable in scope and nature to the preexisting maintenance
standards for highways.
COMMENTS
One comment was received, from the Southwest Commuter Rail Corporation
of Texas. The comment states that the proposed rules are inconsistent with
relevant statutes, cause the pass-through fare methodology to be legally inadequate
and inequitable, and violate public policy.
The comment cites the reference to financing in Transportation Code, §91.075,
as evidence that the commission is required to pay interest on bonds issued
to finance a pass-through fare project. The commission disagrees with this
reading of the statute. The statute is permissive in allowing, but not requiring,
the department to enter pass-through fare agreements. The comment also errs
in suggesting that the department would be placing limits on the use of reimbursed
funds. Rather, the rules describe the basis on which the amount of the reimbursement
will be calculated, a determination that is admittedly within the authority
of the commission. How those funds are used after they are paid to the developer
is not addressed by the rules.
The comment also states that the failure to reimburse a developer for interest
expense makes the pass-through fare methodology inadequate and unfair. In
support, the comment cites a case relating to condemnation. The analogy is
not applicable. The department is constitutionally required to provide full
reimbursement whenever property is taken without the owner's consent; the
department is not constitutionally or statutorily required to provide full
reimbursement for all costs in a pass-through fare agreement, which is entered
only with the consent of both parties.
Finally, the comment asserts that public policy requires the reimbursement
of interest expense. No articulated public policy is cited in support. In
contrast, for example, the Texas Uniform Grant Management Standards do not
require the payment of interest expense and indeed forbid it in some instances.
Overall, the comment mistakes the fundamental nature of a pass-through
agreement. Pass-through agreements are not in the nature of public utility
regulation, eminent domain, or loan guarantees. Rather, pass-through agreements
are joint contractual endeavors in which the parties must agree on the distribution
of costs and risks. In declining to reimburse a developer for its interest
expenses, the department is properly using its discretion under the statute
to set limits on the extent to which the department will bear the burden of
the developer's costs and risks.
STATUTORY AUTHORITY
The amendments are adopted under Transportation Code, §201.101, which
provides the commission with the authority to establish rules for the conduct
of the work of the department, and more specifically, Transportation Code, §222.104,
which authorizes the department to enter agreements for pass-through tolls,
and Transportation Code, §91.075, which authorizes the department to
enter agreements for pass-through fares.
CROSS REFERENCE TO STATUTE
Transportation Code, §91.075, and §222.104.
§5.58.Project Development by Public or Private Entity.
(a)
Social and environmental impact.
(1)
General. A public or private entity that is responsible
for the construction of a project shall conduct the environmental review and
public involvement for the project in the manner prescribed by Chapter 2,
Subchapter C of this title (relating to Environmental Review and Public Involvement
for Transportation Projects). The department may choose to conduct the environmental
review and public involvement.
(2)
Department approval. The department must approve each environmental
review under this section before construction of the project begins.
(b)
Right of way and utilities.
(1)
Responsibility. This subsection applies when the public
or private entity is responsible for the acquisition of right of way or the
adjustment of utilities.
(2)
Right of way procedures.
(A)
Manual requirements. The acquisition of right of way performed
by or on behalf of the public or private entity shall comply with the latest
version of each of the department's manuals.
(B)
Alternative procedures. A public or private entity may
request written approval to use a different accepted procedure for a particular
item or phase of work. The use of an alternative procedure is subject to the
approval of the Federal Highway Administration. The executive director may
approve the use of an alternative procedure if the alternative procedure is
determined to be sufficient to discharge the department's state and federal
responsibilities in acquiring real property.
(3)
Utility adjustments. The adjustment, removal, or relocation
of utility facilities performed by or on behalf of the public or private entity
shall comply with applicable federal and state laws and regulations.
(c)
Design and construction.
(1)
Responsibility. This subsection applies when the public
or private entity is responsible for the design, construction, and, operation,
as applicable, of each project it undertakes. This responsibility includes
ensuring that all EPIC are addressed in project design and carried out during
project construction and operation.
(2)
Design criteria.
(A)
State criteria. All designs developed by or on behalf of
the public or private entity shall comply with the latest version of the department's
manuals.
(i)
Highway projects. Each highway project shall, at a minimum,
comply with the:
(I)
Roadway Design Manual;
(II)
Pavement Design Manual;
(III)
Hydraulic Design Manual;
(IV)
Texas Manual on Uniform Traffic Control Devices;
(V)
Bridge Design Manual; and
(VI)
Texas Accessibility Standards.
(ii)
Railway projects. Each railway project shall comply, at
a minimum, with the current version of the American Railway Engineering and
Maintenance of Right of Way Association standards.
(B)
Alternative criteria. A public or private entity may request
approval to use different accepted criteria for a particular item of work.
Alternative criteria may include the latest version of the AASHTO Policy on
Geometric Design of Highways and Streets, the AASHTO Pavement Design Guide,
and the AASHTO Bridge Design Specifications. The use of alternative criteria
is subject to the approval of the Federal Highway Administration or the Federal
Railroad Administration for those projects involving federal funds. The executive
director may approve the use of alternative criteria if the alternative criteria
are determined to be sufficient to protect the safety of the traveling public
and protect the integrity of the transportation system.
(C)
Exceptions to design criteria. A public or private entity
may request approval to deviate from the state or alternative criteria for
a particular design element on a case-by-case basis. The request for approval
shall state the criteria for which an exception is being requested and must
include a comprehensive description of the circumstances and engineering analysis
supporting the request. The executive director may approve an exception after
determining that the particular criteria could not reasonably be met due to
physical, environmental, or other relevant factors and that the proposed design
is a prudent engineering solution.
(3)
Access to a highway project.
(A)
Access management. Access to a highway shall be in compliance
with the department's access management policy.
(B)
Interstate access. For proposed highway projects that will
change the access control line to an interstate highway, the public or private
entity shall submit to the department all data necessary for the department
to request Federal Highway Administration approval.
(4)
Preliminary design submission and approval. When design
is approximately 30% complete or as otherwise provided in a pass-through agreement,
the public or private entity shall send the following preliminary design information
to the department for review and approval in accordance with the procedures
and timeline established in the project development agreement described in
subsection (d) of this section:
(A)
for a highway project, a completed Design Summary Report
form as contained in the department's Project Development Process Manual;
(B)
a design schematic depicting plan, profile, and superelevation
information for each roadway or a design schematic depicting plan, profile,
and superelevation based on top of railway for each railway line;
(C)
typical sections showing existing and proposed horizontal
dimensions, cross slopes, location of profile grade line, pavement layer thickness
and composition, earthen slopes, and right of way lines for each roadway or
subballast and ballast layer thickness and composition for each railway line;
(D)
bridge, retaining wall, and sound wall layouts;
(E)
hydraulic studies and drainage area maps showing the drainage
of waterways entering the project and local project drainage;
(F)
an explanation of the anticipated handling of existing
traffic during construction;
(G)
when structures meeting the definition of a bridge as defined
by the National Bridge Inspection Standards are proposed, an indication of
structural capacity in terms of design loading;
(H)
an explanation of how the U.S. Army Corps of Engineers
permit requirements, including associated certification requirements of the
Texas Commission on Environmental Quality, will be satisfied if the project
involves discharges into waters of the United States; and
(I)
for a highway project, the location and text of proposed
mainlane guide signs shown on a schematic that includes lane lines or arrows
indicating the number of lanes.
(5)
Highway construction specifications.
(A)
All plans, specifications, and estimates developed by or
on behalf of the public or private entity for a highway project shall conform
to the latest version of the department's Standard Specifications for Construction
and Maintenance of Highways, Streets, and Bridges, and shall conform to department-required
special specifications and special provisions.
(B)
The executive director may approve the use of an alternative
specification if the proposed alternative specification is determined to be
sufficient to ensure the quality and durability of the finished product for
the intended use and the safety of the traveling public.
(6)
Railway construction specifications.
(A)
All plans, specifications, and estimates developed by or
for the public or private entity for a railway project shall conform to all
construction and material specifications established in the American Railway
Engineering and Maintenance of Right of Way Association standards.
(B)
The executive director may approve the use of an alternative
specification if the proposed alternative specification is determined to be
sufficient to ensure the quality and durability of the finished product for
the intended use and the safety of the public and the railway system.
(7)
Submission and approval of final design plans and contract
administration procedures. When final plans are complete, the public or private
entity shall send the following information to the executive director for
review and approval in accordance with the procedures and timelines established
in the contract described in §5.56(b) of this chapter:
(A)
seven copies of the final set of plans, specifications,
and engineer's estimate (PS&E) that have been signed and sealed by the
responsible engineer;
(B)
revisions to the preliminary design submission previously
approved by the department in a format that is summarized or highlighted for
the department;
(C)
a proposal for awarding the construction contract in compliance
with applicable state and federal requirements;
(D)
contract administration procedures for the construction
contract with criteria that comply with the applicable national or state administration
criteria and manuals; and
(E)
the location and description of all EPIC addressed in construction.
(8)
Construction inspection and oversight.
(A)
Unless the department agrees in writing to assume responsibility
for some or all of the following items, the public or private entity is responsible
for:
(i)
overseeing all construction operations, including the oversight
and follow through with all EPIC;
(ii)
assessing contract revisions for potential environmental
impacts; and
(iii)
obtaining any necessary EPIC required for contract revisions.
(B)
The department may inspect the construction of the project
at times and in a manner it deems necessary to ensure compliance with this
section.
(9)
Contract revisions. All revisions to the construction contract
shall comply with the latest version of the applicable national or state administration
criteria and manuals, and must be submitted to the department for its records.
Any revision that affects prior environmental approvals or significantly revises
project scope or the geometric design must be submitted to the executive director
for approval prior to beginning the revised construction work. Procedures
governing the executive director's approval, including time limits for department
review, shall be included in the contract described in §5.56(b) of this
chapter.
(10)
As-built plans. Within six months after final completion
of the construction project, the public or private entity shall file with
the department a set of the as-built plans incorporating any contract revisions.
These plans shall be signed, sealed, and dated by a professional engineer
licensed in Texas certifying that the project was constructed in accordance
with the plans and specifications.
(11)
Document and information exchange. The public or private
entity agrees to deliver to the department all materials used in the development
of the project including aerial photography, computer files, surveying information,
engineering reports, environmental documentation, general notes, specifications,
and contract provision requirements.
(12)
State and federal law. The public or private entity shall
comply with all federal and state laws and regulations applicable to the project
and the state highway system, and shall provide or obtain all applicable permits,
plans, and other documentation required by a federal or state entity.
(d)
Contracts. All contracts for the development, construction,
or operation of a project shall be awarded in compliance with applicable law.
(e)
Federal law. If any federal funds are used in the development
or construction of a project under this subchapter, or if the department intends
to fund pass-through toll payments with federal funds, the development and
construction of the project shall be accomplished in compliance with all applicable
federal requirements.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on March 31, 2006.
TRD-200601965
Bob Jackson
Deputy General Counsel
Texas Department of Transportation
Effective date: April 20, 2006
Proposal publication date: February 10, 2006
For further information, please call: (512) 463-8683
Subchapter O. UTILITY ACCOMMODATION FOR RAIL FACILITIES
Chapter 21.
RIGHT OF WAY