PART 10. TEXAS WATER DEVELOPMENT BOARD
CHAPTER 363. FINANCIAL ASSISTANCE PROGRAMS
The Texas Water Development Board (Board) adopts amendments to §363.1006 and §363.1207 with changes to the proposed text as published in the January 30, 2009, issue of the Texas Register (34 TexReg 513). The amendments to §§363.1007, 363.1206, and 363.1208 are adopted without changes to the proposed text and will not be republished.
BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE ADOPTED RULES
The Board adopts this rulemaking to amend its current rules related to the application and prioritization process for the Board's commitment to provide financial assistance from its State Participation Account and Water Infrastructure Fund. The adopted amendments will clarify the prioritization process and will provide the flexibility needed for the Board to make commitments to financial assistance and to sell bonds to raise funds for those commitments before the end of each fiscal year. The Board funds the State Participation Account and Water Infrastructure Fund through the issuance of Water Financial Assistance Bonds, which are General Obligation Bonds of the State of Texas. Both the State Participation Account and Water Infrastructure Fund programs offer loans at discounts or with deferred interest, so they are non-self supporting programs, meaning that the Board is not able to pay the debt service on its Water Financial Assistance Bonds solely with the repayment of the loans it makes through these programs. Thus, the Texas Legislature appropriates funds to both of these programs as necessary to allow the Board to pay the debt service on its Bonds. The legislative appropriations are effective for each fiscal year starting September 1, so the Board attempts to sell bonds as necessary to fund existing commitments for financial assistance within each fiscal year, commensurate with the amount of Legislative appropriation for debt service for that fiscal year.
The adopted rulemaking also clarifies the Board's rule regarding the eligibility of reservoir projects for the Pre-design Funding Option under the Board's Water Infrastructure Fund.
SECTION BY SECTION DISCUSSION, COMMENTS, AND RESPONSES TO COMMENTS
The Board received comments from Connie Ripley, President of the Don't Empty Lake Travis Association, on behalf of the board and members of the Association (hereinafter the "commenter").
§363.1006(a)
The adopted amendment of §363.1006(a) changes the application deadlines from January 1 and July 1 to February 1 and August 1 of each year. Applications for financial assistance are prioritized twice each year and are funded based on available funds. Current §363.1006(a) requires that applications for financial assistance from the State Participation Account and Water Infrastructure Fund, respectively, be submitted on January 1 and July 1 of each year for prioritization. However, the Board believes that revising these deadlines will provide better management of the sale of bonds in coordination with the Board's fiscal year. The Board needs to make commitments early enough during each fiscal year so that the Board may sell its bonds within that fiscal year to raise funds for those commitments, utilizing legislative appropriations available during each fiscal year. Thus, the adopted rulemaking changes these application deadlines from January 1 and July 1 to February 1 and August 1 of each year, so that the Board can prioritize the applications in March and September, to allow adequate time to make commitments and sell bonds before the end of each fiscal year. In addition, the adopted rulemaking provides that the Executive Administrator may set additional application deadlines, prioritize applications, and present those applications to the Board for a commitment if the Executive Administrator deems it necessary in order to utilize available funds in any fiscal year.
The adopted amendment of §363.1006(a) also allows the Executive Administrator to accept abridged applications for prioritization purposes, as long as those applications contain adequate information to establish that the applicant qualifies for state participation funding, to describe the project comprehensively, and to establish the cost of the project, as well as any other information requested by the Executive Administrator. Section 363.1006(a) currently requires a complete application for prioritization purposes, and many applicants have found this requirement burdensome, especially when the applicant might not be ranked high enough to receive funding, depending on the availability of funds. Therefore, the adopted amendments allow the Executive Administrator to accept abridged applications for prioritization purposes, as long as those applications contain adequate information necessary for prioritization purposes.
The adopted amendment of §363.1006(a) also adds a provision that an applicant must submit a complete application to the board within 30 days after the Board meeting at which the project receives priority for funding, or the project will lose its priority ranking and the Board may commit to other projects consistent with the prioritization.
Comment 1: The commenter states that prioritization should not include applications previously considered and urges the Board to clarify this position so that prior applicants who merely regenerate the same application in another guise will not be considered until after the expiration of a calendar year.
The Board disagrees with this comment. An applicant should be able to resubmit its application for the next round of prioritization if it does not score high enough for funding in a previous round. In fact, the Executive Administrator of the Board has historically allowed applicants to resubmit their applications. Waiting until after the expiration of a calendar year would not benefit the process, and applicants will not be at a disadvantage because projects are independently scored during each round of prioritization. The Board makes no changes pursuant to this comment.
Comment 2: The Executive Administrator's decision setting additional deadlines and prioritizing applications in order to utilize available funding should identify the specific reasoning involved as well as providing a statement as to why the funds remain available.
The Board agrees that the Executive Administrator should demonstrate his reasoning behind his decision to set additional deadlines and prioritize applications, and why there are funds available after the second round of prioritization and commitments. However, the Board does not think it is necessary to put this requirement in the rule because the Executive Administrator must present the additional prioritization to the Board and will have the obligation at that time to explain the reasons for the additional round of prioritization and why funds remain available. No change is made pursuant to this comment.
Comment 3: Regarding additional deadlines and priorities, the proposed rule penalizes entities submitting a complete application on the due date by allowing for the possibility of an expanded pool of applicants, and thus may impair the ability of an applicant with a complete application to have its project considered on its merits.
The Board disagrees with this comment. The rule does not penalize nor give preference to those with either completed or abridged applications. Instead, the rule is intended to make it easier to submit applications for prioritization purposes. The Board wishes to expand the pool of applicants, rather than restrict it, so that the Board can prioritize and fund projects that provide the greatest benefit to the communities of Texas. Also, the information in an application that is relevant to prioritization determinations is not compromised. No change is made pursuant to this comment.
Comment 4: The suggested purpose appears to allow the Executive Administrator to reprioritize projects in an attempt to "use it or lose it" regarding remaining funds. While we are sure that there are lots of desirable and worthy projects around the state, it should not detract from a thorough and honest review.
The Board agrees with this comment, but no change is made pursuant to this comment. All applications for funding are thoroughly and conscientiously reviewed before prioritization and before consideration for commitment to funding.
Comment 5: The ability of the Executive Administrator to unilaterally alter or set additional deadlines and prioritize applications makes priority rankings ineffective and renders the proposed process susceptible to additional questions and in need of oversight and accountability.
The Board disagrees with this comment. The additional deadlines are only authorized if the Executive Administrator finds it necessary to take advantage of available funding. Additional prioritizations are intended to be used in order to commit all funds that could be raised by the Board's issuance of bonds before the legislative appropriation for those bonds lapses. The Executive Administrator is accountable to the Board and must present any additional prioritizations to the Board. The deadlines for prioritization are established to provide each applicant the ability to be considered alongside other applications and to be prioritized on a fair and competitive basis consistent with statutory criteria, rather than first-come, first-served. Allowing the Executive Administrator to set additional deadlines and prioritize additional applications will not make priority rankings ineffective, but will instead provide the Board with additional applications to consider for funding if the previous rounds of prioritization do not result in commitments for all of the available funds. This approach maximizes the benefit of any given legislative appropriation. No change is made pursuant to this comment.
Comment 6: Reprioritizing applicants who find that submitting a complete application in a timely fashion is somehow burdensome as identified in the rule's reasoning does an injustice to those applicants who have spent their time and resources on submitting a properly completed application.
The Board disagrees with this comment. The rule will benefit all applicants to have the option to submit an abridged application for prioritization purposes, and all applicants are free to choose whether to submit a complete application or an abridged application for prioritization purposes. Further, the abridged application for prioritization purposes must contain enough information for the Executive Administrator to score and fairly prioritize projects. No change is made pursuant to this comment.
Comment 7: The 30 day grace period is without teeth if, in missing this deadline, the project "may" lose its priority.
The Board agrees with this comment. The proposed rule provides that an applicant "may" lose its priority if it does not submit a complete application by the deadline. If there is a large amount of competition for available funds, it will benefit both the Board and applicants to require applicants to automatically lose their priority if they cannot timely submit a complete application. If an applicant automatically loses its priority, the Executive Administrator can more quickly bring the next applicant in line to the Board for a funding commitment. Accordingly, the proposed text is changed by inserting the word "will" instead of "may."
Comment 8: Overall, the proposed system does not appear to allow all administratively complete and technically feasible applicants to be considered equally.
The Board disagrees with this comment. The abridged application for prioritization purposes must contain enough information for the Executive Administrator to score and fairly prioritize projects based on statutory criteria and Board rules. Those applications that are administratively complete may be immediately considered by the Board for a funding commitment, whereas abridged applications must be administratively complete before the Board will consider them for a funding commitment. Either way, each application is considered equally on its own merits for both prioritization and commitment purposes. No change is made pursuant to this comment.
§363.1006(b)
The adopted amendment of §363.1006(b) deletes the requirement that the Executive Administrator provide the Board a list of all completed applications, in order to be consistent with the adopted amendment of §363.1006(a) allowing the Executive Administrator to accept abridged applications for prioritization purposes. The amendment also adds language that clarifies that the Executive Administrator is to provide a prioritized list to the Board with applications recommended by the Executive Administrator.
No comments were received regarding this section.
§363.1006(c)
The adopted amendment of §363.1006(c) deletes the requirement that legislatively-mandated projects receive priority for financial assistance and moves this requirement to §363.1007(a). Currently, §363.1006(c) contains the requirement that legislatively-mandated projects receive priority for financial assistance. However, the Executive Administrator should take this requirement into account when preparing the prioritized list under the prioritization criteria in §363.1007. Therefore, the adopted amendment moves this requirement to §363.1007 so that the Executive Administrator will prioritize the Legislatively-mandated projects first in the prioritized list that is presented to the Board under the procedures in §363.1006.
No comments were received regarding this section.
§363.1007
The adopted amendment of §363.1007 adds subsection (a) with the requirement that the board will give priority to projects that the Legislature has determined shall receive priority for financial assistance from the State Participation Account. It also reletters current subsection (a) as (b), and requires that the Executive Administrator will prioritize projects after first prioritizing projects with legislative priority.
No comments were received regarding this section.
§363.1206
The adopted amendment of §363.1206(b) clarifies that reservoir projects are eligible for a Board commitment to fund planning, permitting, acquisition and design costs under the Water Infrastructure Fund pre-design funding option. Applicants for reservoir construction funds must complete planning, permitting, acquisition, and design before receiving a commitment to fund reservoir building costs. Section 363.1206(b) can currently be interpreted to mean that reservoir projects are not eligible for the pre-design funding option under the Water Infrastructure Fund. The intent of the rule is to require applicants to obtain two separate commitments from the Board for reservoir pre-design activities versus construction activities, not to preclude the pre-design funding option for reservoirs altogether. Texas Water Code §15.974(a)(3) specifically provides for the funding of planning, design, and permitting costs from the Water Infrastructure Fund, which are considered pre-design activities. The amendment clarifies that, for reservoir projects, the Board intends to make commitments from the Water Infrastructure Fund for the building costs of reservoirs separately from the planning, permitting, acquisition, and design costs. The adopted amendment of §363.1206(b) is also consistent with the Board's adopted deletion of similar language prohibiting pre-design funding for reservoirs in §363.16(b), published in the December 12, 2008, issue of the Texas Register (33 TexReg 10133). That rulemaking will allow for the Board's commitment to fund all phases of a reservoir project under the pre-design funding option from the Board's financial assistance programs other than the Water Infrastructure Fund.
No comments were received regarding this section.
§363.1207(a)
The adopted amendment of §363.1207(a) changes these application deadlines from January 1 and July 1 to February 1 and August 1 of each year. Applications for financial assistance are prioritized twice each year and are funded based on available funds. Current §363.1207(a) requires that applications for financial assistance from the State Participation Account and Water Infrastructure Fund, respectively, be submitted on January 1 and July 1 of each year for prioritization. However, the Board believes that revising these deadlines will provide better management of the sale of bonds in coordination with the Board's fiscal year. The Board needs to make commitments early enough during each fiscal year so that the Board may sell its bonds within that fiscal year to raise funds for those commitments, utilizing legislative appropriations available during each fiscal year. Thus, the adopted rulemaking changes these application deadlines from January 1 and July 1 to February 1 and August 1 of each year, so that the Board can prioritize the applications in March and September, to allow adequate time to make commitments and sell bonds before the end of each fiscal year. In addition, the adopted rulemaking provides that the Executive Administrator may set additional application deadlines, prioritize applications, and present those applications to the Board for a commitment if the Executive Administrator deems it necessary in order to utilize available funds in any fiscal year.
The adopted amendment of §363.1207(a) also allows the Executive Administrator to accept abridged applications for prioritization purposes, as long as those applications contain adequate information to establish that the applicant qualifies for state participation funding, to describe the project comprehensively, and to establish the cost of the project, as well as any other information requested by the Executive Administrator. Section 363.1207(a) currently requires a complete application for prioritization purposes, and many applicants have found this requirement burdensome, especially when the applicant might not be ranked high enough to receive funding, depending on the availability of funds. Therefore, the adopted amendments allow the Executive Administrator to accept abridged applications for prioritization purposes, as long as those applications contain adequate information necessary for prioritization purposes.
The adopted amendment of §363.1207(a) also adds a provision that an applicant must submit a complete application to the Board within 30 days after the Board meeting at which the project receives priority for funding, or the project will lose its priority ranking and the Board may commit to other projects consistent with the prioritization.
The commenter states that it has the similar/same comments as with §363.1006(a) above.
In response to the "similar/same comments" as the commenter has with §363.1006(a), the Board references its responses to those comments above, and makes no changes except where the proposed rule provides that an applicant "may" lose its priority if it does not submit a complete application by the deadline. If there is a large amount of competition for available funds, it will benefit both the Board and applicants to require applicants to automatically lose their priority if they cannot timely submit a complete application. If an applicant automatically loses its priority, the Executive Administrator can more quickly bring the next applicant in line to the Board for a funding commitment. Accordingly, the proposed text is changed by inserting the word "will" instead of "may."
The commenter states that allowing for abridged applications allows for the manipulation of applicants and penalizes those applicants who spent time and resources on submitting a properly completed application--in effect giving a candidate or project that the commenter considers less qualified a "second bite at the apple."
The Board disagrees with this comment because it will benefit all applicants to have the option to submit an abridged application for prioritization purposes, and all applicants are free to choose whether to submit a complete application or an abridged application for prioritization purposes. Further, the abridged application for prioritization purposes must contain enough information for the Executive Administrator to score and fairly prioritize projects consistent with statutory criteria and Board rules. No change is made pursuant to this comment.
§363.1207(b)
The adopted amendment of §363.1207(b) deletes the requirement that the Executive Administrator provide the Board a list of all completed applications, in order to be consistent with the adopted amendment of §363.1207(a) allowing the Executive Administrator to accept abridged applications for prioritization purposes. The amendment also adds language that clarifies that the Executive Administrator is to provide a prioritized list to the Board with applications recommended by the Executive Administrator.
§363.1207(c)
The adopted amendment of §363.1207(c) deletes the requirement that Legislatively-mandated projects receive priority for financial assistance and move the requirement to §363.1208(a). Currently, §363.1207(c) contains the requirement that legislatively-mandated projects receive priority for financial assistance. However, the Executive Administrator should take this requirement into account when preparing the prioritized list under the prioritization criteria in §363.1208. Therefore, the adopted amendment moves this requirement to §363.1208(a) so that the Executive Administrator will prioritize the Legislatively-mandated projects first in the prioritized list that is presented to the Board under the procedures in §363.1006.
No comments were received regarding this section.
§363.1208
The adopted amendment of §363.1208(a) adds the requirement that the Board will give priority to projects that the Legislature has determined shall receive priority for financial assistance from the Water Infrastructure Fund.
The adopted amendment of §363.1208(b) makes non-substantive technical corrections for clarity.
The adopted amendment of §363.1208(c) adds the provision that the median annual household income may also be calculated using data from a survey approved by the Executive Administrator of a statistically acceptable sampling of customers in the service area completed within the last 12 months. Currently, §363.1208(c) requires the use of U.S. Bureau of the Census data. The amendment is necessary because certain areas of the State might not be able to determine the median annual household income from available U.S. Bureau of the Census data.
The commenter states, regarding §363.1208(c), that this rule should clearly state that the alternative method can only be used in those areas unable to determine income from Census data and the Board should define the term "statistically acceptable" so that all applicants are examined and considered fairly.
The Board disagrees with this comment. The alternate method may be used whether or not there is Census data available for an area, although the Board agrees that the alternative method may be the only way to determine the median household income in a service area for which there is no Census data available. Also, it would be difficult to adequately define "statistically acceptable," as a categorical definition appropriate to all circumstances. Accordingly, the rule provides that the sampling must be statistically acceptable to the Executive Administrator, and the Executive Administrator's determination will be reviewed by the Board prior to commitment. This term is also used in other Board rules regarding determining median household income. See, e.g., 31 TAC §371.24(b)(7) and §375.19(b)(7). No change is made pursuant to this comment.
SUBCHAPTER J. STATE PARTICIPATION PROGRAM
STATUTORY AUTHORITY
The amendments are adopted under the authority of Texas Water Code §6.101, which authorizes the Board to adopt rules necessary to carry out the powers and duties of the Board; §15.977, which authorizes the Board to adopt rules necessary to administer Texas Water Code, Chapter 15, Subchapter Q; and §15.995, which authorizes the Board to adopt rules necessary to administer Texas Water Code, Chapter 15, Subchapter R.
Cross reference to statute: Texas Water Code, Chapters 15 and 17.
§363.1006.Prioritization System.
(a) The executive administrator will prioritize all applications not previously considered by the board twice annually. An application must be submitted by February 1 to be prioritized in March. An application must be submitted by August 1 to be prioritized in September. The executive administrator will provide the prioritization to the board for approval in March and September of each year or as soon thereafter as practicable. The executive administrator may set additional application deadlines, prioritize applications, and present the prioritization and those applications to the board for a commitment if the executive administrator deems it necessary in order to utilize available funds in any fiscal year. To be considered for prioritization, an applicant must provide adequate information to establish that the applicant qualifies for state participation funding, to describe the project comprehensively, and to establish the cost of the project, as well as any other information requested by the executive administrator. The executive administrator will develop and provide to applicants detailed information on the abridged application necessary for prioritization. If an applicant submits an abridged application for prioritization purposes, the applicant must submit a complete application to the board within 30 days after the board meeting at which the applicant's project received priority for funding, or the project will lose its priority ranking and the board may commit to other projects consistent with the prioritization.
(b) Prior to each board meeting at which applications may be considered, the executive administrator shall:
(1) for each application that the executive administrator has determined has adequate information for prioritization purposes, prioritize the applications using the criteria identified in §363.1007 of this title (relating to Prioritization Criteria).
(2) provide to the board a prioritized list of all applications as recommended by the executive administrator, the amount of funds requested and the priority of each application received; and
(3) identify to the board, the total amount of funds available in the State Participation Account for new applications.
(c) When making commitments for financial assistance from the State Participation Account, the board will consider projects in descending numerical order based on the priority assigned to the application according to §363.1007 of this title. The board will consider the next application on the list only if there are funds available in the account to fund all or, if acceptable to the applicant, a part of the application.
(d) The board shall determine the amount of funds available for water plan projects and shall prioritize and consider those separately from projects that are not water plan projects.
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 26, 2009.
TRD-200901209
Kenneth L. Petersen
General Counsel
Texas Water Development Board
Effective date: April 15, 2009
Proposal publication date: January 30, 2009
For further information, please call: (512) 463-8061
STATUTORY AUTHORITY
The amendments are adopted under the authority of Texas Water Code §6.101, which authorizes the Board to adopt rules necessary to carry out the powers and duties of the Board; §15.977, which authorizes the Board to adopt rules necessary to administer Texas Water Code, Chapter 15, Subchapter Q; and §15.995, which authorizes the Board to adopt rules necessary to administer Texas Water Code, Chapter 15, Subchapter R.
Cross reference to statute: Texas Water Code, Chapters 15 and 17.
§363.1207.Prioritization System.
(a) The executive administrator will prioritize all applications not previously considered by the board twice annually. An application must be submitted by February 1 to be prioritized in March. An application must be submitted by August 1 to be prioritized in September. The executive administrator will provide the prioritization to the board for approval in March and October of each year or as soon thereafter as practicable. The executive administrator may set additional application deadlines, prioritize applications, and present the prioritization and those applications to the board for a commitment if the executive administrator deems it necessary in order to utilize available funds in any fiscal year. To be considered for prioritization, an applicant must provide adequate information to establish that the applicant qualifies for Water Infrastructure Fund funding, to describe the project comprehensively, and to establish the cost of the project, as well as any other information requested by the executive administrator. The executive administrator will develop and provide to applicants detailed information on the abridged application necessary for prioritization. If an applicant submits an abridged application for prioritization purposes, the applicant must submit a complete application to the board within 30 days after the board meeting at which the applicant's project received priority for funding, or the project will lose its priority ranking and the board may commit to other projects consistent with the prioritization.
(b) Prior to each board meeting at which applications may be considered for prioritization, the executive administrator shall:
(1) for each application that the executive administrator has determined has adequate information for prioritization purposes, prioritize the applications by the criteria identified in §363.1208 of this title (relating to Prioritization Criteria).
(2) provide to the board a prioritized list of all applications as recommended by the executive administrator, the amount of funds requested and the priority of each application received and
(3) identify the total amount of funds available in the Water Infrastructure Fund for new applications.
(c) If there are funds in the Water Infrastructure Fund available for all or part of any of the prioritized projects, the board will first consider any projects that the legislature has determined shall receive priority for financial assistance from the Water Infrastructure Fund. If, after considering projects with legislative priority, there are funds available for other eligible projects in the Water Infrastructure Fund, then the board will consider applications to make a commitment for financial assistance in descending order of priority according to §363.1208 of this title. The board will consider the next application on the list only if there are funds available in the account to fund all or, if acceptable to the applicant, a part of the application.
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 26, 2009.
TRD-200901210
Kenneth L. Petersen
General Counsel
Texas Water Development Board
Effective date: April 15, 2009
Proposal publication date: January 30, 2009
For further information, please call: (512) 463-8061
SUBCHAPTER I. PROVISIONS RELATING TO APPLICATIONS FOR FINANCIAL ASSISTANCE UNDER SPECIAL CAPITALIZATION GRANTS; EXPEDITED REVIEW, PROCESSING AND LOAN CLOSING REQUIREMENTS
The Texas Water Development Board (TWDB or Board) adopts new Subchapter I, §§371.200 - 371.208, regarding the Drinking Water State Revolving Fund. Sections 371.203 - 371.205 are adopted with changes to the proposed text as published in the January 30, 2009, issue of the Texas Register (34 TexReg 517). Sections 371.201, 371.202, and 371.206 - 371.208 are adopted without changes to the proposed text as published and will not be republished.
The rules relate to the Drinking Water State Revolving Fund. They provide for an expedited financial application review, processing and closing process for applications which have been filed in response to special federal capitalization grants for emergency events, economic recovery efforts and similar special initiatives. The purpose of these rules is to provide the Board with appropriate flexibility in complying with terms and conditions required for special funding in order to ensure that the funding is fully utilized to the benefit of the state's political subdivisions.
The Board received comments from Connie Ripley, President of the Don't Empty Lake Travis Association, on behalf of the Association (hereinafter the "commenter").
§371.200
The Board adopts new §371.200 (relating to Purpose) in order to make clear that the provisions of Subchapter I are to be interpreted and applied in a manner that fully supports whatever flexibility is necessary and appropriate to implement the terms and conditions of any special capitalization grant.
The commenter states that "whatever flexibility" suggests that other rules and processes would be disregarded to use or lose funds and requested clarification that this in no way diminishes the existing programs or reviews. Being flexible should not mean having to ignore existing constraints that are based on learned experience. The Board makes no change because the rule as proposed recognizes that the flexibility is limited by existing restraints. Section 371.200 as proposed states that the flexibility is specified "as necessary and appropriate to the terms of that capitalization grant or the requirements of any capitalization grant agreement to the greatest extent necessary." No change is made pursuant to this comment.
§371.201
The Board adopts new §371.201 (relating to Definitions) to define the terms "capitalization grant", "emergency event" and "ready to proceed." The term "capitalization grant" means a capitalization grant funded by a special appropriation from the United States Congress for any special purpose, including, but not limited to, responding to emergency events and supporting economic recovery efforts. The term "emergency event" shall be broadly defined to include natural disasters such as hurricanes, tornadoes, flooding events, earthquakes, prolonged drought conditions and other natural disasters as well as man-made disasters, acts of terrorism or enemy attacks that result in damage to or the impairment of a public water supply system. The term "ready to proceed" means that a project has all of the approvals required in this chapter needed in order to commence construction.
The commenter states, regarding §371.201(3), that the term "approvals" is ambiguous, and requested clarification. Also, the TWDB should provide a comprehensive list of what it expects is necessary in order to avoid misunderstandings. The Board makes no change because the rule is unambiguous that a project is considered ready to proceed if it has all of the approvals required in Chapter 371 in order to commence construction. The Board purposely referenced the entire chapter, and did not specifically list in this definition all the requirements to commence construction, because the requirements for each stage of the financial assistance process are found throughout the chapter, and any attempt to include a list of those requirements in this rule could be confusing and would not necessarily serve to clarify the definition. No change is made pursuant to this comment.
§371.202
The Board adopts new §371.202 (relating to Eligibility Requirements) to define those projects and activities that are eligible for this expedited application review, processing and closing process. All projects must be listed on an intended use plan (IUP) for the Drinking Water State Revolving Fund program and must further be related to or arising from an emergency event(s) or an economic recovery initiative or other special purpose being implemented by the EPA or other federal agency through a capitalization grant agreement executed by and between the Board and the EPA.
§371.203
The Board adopts new §371.203 (relating to Intended Use Plan) to provide procedures to develop an IUP as necessary to implement any special capitalization grant. The IUP will identify those projects anticipated to receive assistance from funds available under the capitalization grant. The list of projects in the IUP, which shall be presented by priority ranking, may also serve as a project priority list if required by the capitalization grant. The adopted rule contains a non-substantive technical correction from the proposed rule in that "executive director" is replaced with "executive administrator" in subsection (f).
The commenter states, regarding §371.203(f), that the rule should identify that an expedited review will nonetheless be presented to the Board as contemplated in §371.206. The Board disagrees. Section 371.203(f) as proposed already requires approval by the Board of any revised process used to expedite the rating process. Section 371.206, on the other hand, has to do with action by which the Board commits funding to individual applications, rather than the process by which the applications are rated prior to Board action on specific funding commitments. No change is made pursuant to this comment.
§371.204
The Board adopts new §371.204 (relating to Applicable Rules) to provide that the rules governing applications for funding from the state's Drinking Water State Revolving Fund will be generally applicable to an application for expedited review, processing and closing under this subchapter, except as provided otherwise in this subchapter.
§371.205
The Board adopts new §371.205 (relating to Review of Applications by Executive Administrator) to explain the manner in which the staff intends to review and process the incoming applications seeking expedited review. The executive administrator shall review each application to determine whether it is administratively complete and shall request any additional information needed in order to process the application as soon as practicable. Such information shall be provided within the timeframe specified by the executive administrator. Once administratively and technically complete, the application will be scheduled for Board consideration.
§371.206
The Board adopts new §371.206 (relating to Formal Action by the Board) to specify the manner in which applications undergoing expedited review and processing under this subchapter will be considered by the Board. The executive administrator shall present the application to the Board as soon as practicable after the application has been deemed administratively complete, the project has been deemed eligible for funding and the project has been deemed to be technically feasible. The applicant and other interested parties known to the Board will be notified of the time and place of the Board meeting prior to the meeting and arguments both for and against the issuance of the financing commitment may be made at that time.
At the conclusion of the meeting, the Board will have the authority to approve, disapprove, amend or continue consideration of the application. The Board may only approve the application if it finds that the revenue and/or taxes pledged by the applicant will be sufficient to meet any loan obligations assumed by the applicant. The commitment will specify the applicable commitment period, after which time the commitment expires.
The commenter states, regarding §371.206(a), that the provision ensuring evidence and arguments are heard should be mandatory. The Board disagrees with this comment because there is no requirement, statutory or otherwise, that the Board hear evidence and arguments or hold a contested case hearing on an application for financial assistance. The Board, however, considers applications for funding in open meetings where the public may present comments. No change is made pursuant to this comment.
§371.207
The Board adopts new §371.207 (relating to Lending Rates) to define pertinent terms and to establish procedures that will be used to set lending rates for projects arising from emergency events, economic recovery efforts, or other special purposes consistent with the terms of the capitalization grant. In establishing the procedures to be used to set rates for applications processed under this subchapter, the executive administrator shall set interest rates for loans under this subchapter based upon costs of funds to the Board, risk factors associated with managing the Board's loan portfolio, market rate scales, and other factors consistent with the capitalization grant. In terms of timing, the executive administrator will set rates for loans on a date that is five (5) business days prior to the adoption of the political subdivision's bond ordinance or resolution or the execution of a loan agreement; and not more than 45 days before the anticipated closing of the loan from the Board. After 45 days from the assignment of the interest rate on the loan, the rates may only be extended with the executive administrator's approval.
§371.208
The Board adopts new §371.208 (relating to Waiver of Rules) to allow the provisions of this subchapter to be waived or modified by the executive administrator as necessary and appropriate to implement the terms of the special capitalization grant or to comply with the conditions of the capitalization grant agreement. The Board must find that all waivers or modifications of this subchapter are necessary and appropriate to implement the terms of the capitalization grant or to comply with the conditions of the capitalization grant agreement prior to approving any application for financial assistance using this expedited review, processing and closing process.
The commenter states, regarding §371.208(a), that in accepting special capitalization grants and in negotiating their terms, the Board should clearly be an active participant and act separately on each item requiring a waiver of any portion of this subchapter. The Board agrees with this comment, but makes no changes to the rule as proposed. The proposed rule includes a requirement that the Board must find that all waivers or modifications of this subchapter are necessary and appropriate to implement the terms of the capitalization grant or to comply with the conditions of the capitalization grant agreement prior to approving an application for financial assistance using this expedited review, processing and closing process. The Board is an active participant insofar as the Board provides direction to the executive administrator through its rules and through its discussions at Board meetings. The executive administrator is statutorily authorized to perform the Board's administrative functions with the direction of the Board.
The commenter states, regarding §371.208(b), that any finding by the Board to support any waiver should require the Board specify and explain its reasons and findings. It is current practice that the Board bases its findings on sufficient reasons. No change is necessary to the rule as proposed. The reasons for the Board's findings are explained in the record of each application, including the executive administrator's memoranda to the Board, and listed in the resolutions the Board issues to make commitments to financial assistance. No change is made pursuant to this comment.
Statutory authority: Texas Water Code, §6.101 and §15.605.
Cross reference to statute: Texas Water Code, Chapter 15, Subchapter J.
§371.203.Intended Use Plan.
(a) The board shall prepare an intended use plan (IUP) in cooperation with Texas Commission on Environmental Quality (TCEQ) to meet the requirements of the capitalization grant. The IUP will identify those projects anticipated to receive assistance from funds available under the capitalization grant. The list of projects in the IUP, which shall be presented by priority ranking, may also serve as a project priority list if required by the capitalization grant.
(b) The process for listing projects in the IUP shall be as follows.
(1) As necessary, the executive administrator will provide written notice and solicit project information from entities desiring to receive funding commitments. The notice shall include the form(s) to be used to submit information needed to rate the project and the deadline by which such rating information must be submitted in order for the project to be rated and included in the IUP. The required project information shall include, at a minimum, the following:
(A) the information needed to rate the project;
(B) a description of the proposed facilities;
(C) a description of any required permits, licenses, registrations and other legal authorizations;
(D) the estimated total project cost;
(E) an estimated schedule for construction of the proposed project;
(F) whether the applicant is under enforcement by the TCEQ or the EPA;
(G) for those potential applicants with existing populations of 25,000 or fewer, information regarding whether the community is eligible to receive funding as a disadvantaged community as defined in §371.24 of this title (relating to Disadvantaged Community Program through Loan Subsidies);
(H) a statement that the project is ready to proceed to construction with sufficient detail to support and justify the expedited review process; and
(I) such other information as may be requested by the executive administrator.
(2) The required information must be submitted not later than the deadline specified in the most recent written notice.
(c) Subsequent to adoption of an IUP, the nature of a proposed project included in the IUP may change with written approval of the executive administrator consistent with the terms of the capitalization grant:
(d) If any changes are proposed to the project which would result in a change to the rating score, the project must be re-ranked in the IUP. In this case, the availability of funds will be determined based on the revised rating score.
(e) The IUP will be presented for adoption to the board at a scheduled meeting at which time the board will receive public comment before adopting the plan.
(f) The executive administrator may revise the rating process established in §371.19 of this title (relating to Rating Process) for those applicants seeking an expedited review under this subchapter provided that this revised process is consistent with the capitalization grant and is approved by the board.
§371.204.Applicable Rules.
(a) An application shall comply with the requirements of Chapter 371, Subchapters A - H, except as otherwise provided in Subchapter I or specified by the executive administrator.
(b) In addition to requirements for applications incorporated under subsection (a) of this section, an application under this subchapter shall include a brief description of the project including, but not limited to, the following:
(1) the need for the project;
(2) that the project is consistent with the purposes of the capitalization grant, as defined by terms of the capitalization grant agreement and as determined by the board;
(3) that the project is ready to proceed to construction with sufficient detail to support and justify the expedited review process;
(4) that the applicant will comply with Disadvantaged Business Enterprise "fair share" goals in procuring the project contractors and subcontractors unless expressly waived by the terms of the capitalization grant;
(5) that applications have been filed and/or granted for all applicable local, state and federal permitting, licensing and registration permits, licenses, registrations and other legal authorizations required for the construction and operation of the project; and
(6) that provides the status of any environmental review activities performed in accordance with or in response to the environmental review requirements set forth in §371.35 of this title (relating to Required Environmental Review and Determinations).
§371.205.Expedited Review of the Applications by the Executive Administrator.
The executive administrator will commence a review for administrative completeness as soon as practicable upon receipt of the application and may request any modifications or additional information to ensure consistency with the requirements of this subchapter and the terms of the capitalization grant. The applicant shall respond to any request for modification or for additional information within the timeframe specified in the executive administrator's request. Once the application has been deemed to be administratively complete, the executive administrator will commence a technical review of the project to ensure that it is eligible for processing under this subchapter and that the project is feasible. When this technical review is complete, the application shall be scheduled for board consideration.
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 26, 2009.
TRD-200901211
Kenneth L. Petersen
General Counsel
Texas Water Development Board
Effective date: April 15, 2009
Proposal publication date: January 30, 2009
For further information, please call: (512) 463-8061
The Texas Water Development Board (TWDB or Board) adopts amendments to §375.2 and adopts new Subchapter D, §§375.400 - 375.408, regarding the Clean Water State Revolving Fund. All of the rules are adopted without changes to the proposed text except §375.403, which is adopted with a change to the proposed text, as published in the January 30, 2009, issue of the Texas Register (34 TexReg 520).
The adopted rules provide for an expedited financial application review, processing and closing process for applications which have been filed in response to special federal capitalization grants for emergency events, economic recovery efforts and similar special initiatives. The purpose of these adopted rules is to provide the Board with appropriate flexibility in complying with terms and conditions required for special capitalization grants in order to ensure that the funding is fully utilized to the benefit of the state's political subdivisions.
The Board received comments from Connie Ripley, President of the Don't Empty Lake Travis Association, on behalf of the Association (hereinafter the "commenter").
§375.2
The Board adopts amendments to 31 TAC §375.2(17) relating to the term "construction" to more closely track the definition of "construction" found in §212(1) of the Federal Water Pollution Control Act, as amended. In addition to benefitting the administration of the traditional Clean Water State Revolving Fund by expanding the scope of eligible projects, the amended definition will expand the scope of projects eligible for special capitalization grant funding.
The Board adopts amendments to 31 TAC §375.2(67) relating to the term "treatment works" to more closely track the definition of "treatment works" found in §212(2)(A) and (B) of the Federal Water Pollution Control Act, as amended, or as incorporated by §15.602, Water Code. The revisions to the Board's definition of "treatment works" will explicitly allow funding for the preventing, abating, reducing, storing, treating, separating, or disposing of storm water runoff and waste combined in storm water and sanitary sewer systems, the type of projects that often arise in response to emergency events.
§375.400
The Board adopts new §375.400 (relating to Purpose) in order to make clear that the provisions of Subchapter D are to be interpreted and applied in a manner that fully supports whatever flexibility is necessary and appropriate to implement the terms and conditions of any special capitalization grant.
The commenter states that "whatever flexibility" suggests that other rules and processes be improperly disregarded in order to use or lose funds. Please clarify that this in no way diminishes the existing programs or reviews. Being flexible should not mean having to ignore existing constraints that are based on learned experience. The Board makes no changes because the proposed rule recognizes that the flexibility is limited by existing constraints. Section 375.400 as proposed states that the flexibility is specified "as necessary and appropriate to the terms of that capitalization grant or the requirements of any capitalization grant agreement to the greatest extent necessary." No change is made pursuant to this comment.
§375.401
The Board adopts new §375.401 (relating to Definitions) to define the terms "capitalization grant", "emergency event" and "ready to proceed." The term "capitalization grant" means a capitalization grant funded by special appropriation by the United States Congress for any special purpose, including, but not limited to, responding to emergency events and supporting economic recovery initiatives. The term "emergency event" shall be broadly defined to include natural disasters such as hurricanes, tornadoes, flooding events, prolonged drought conditions, earthquakes and other natural disasters as well as man-made disasters, acts of terrorism or enemy attacks that result in damage to or the impairment of publicly-owned wastewater collection, distribution and treatment works. The term "ready to proceed" means that a project has all of the approvals required in this chapter needed in order to commence construction.
The commenter states, regarding §375.401(3), that the term "approvals" is ambiguous, and to please clarify. Also, the TWDB should provide a comprehensive list of what it expects is necessary in order to avoid misunderstandings. The Board disagrees because the rule is unambiguous that a project is ready to proceed if it has all of the approvals required in Chapter 375 needed in order to commence construction. The Board purposely referenced the entire chapter, and did not specifically list in this definition all the requirements to commence construction, because the requirements for each stage of the financial assistance process are found throughout the chapter, and any attempt to include a list of those requirements in this rule could be confusing and would not serve to clarify the definition. No change is made pursuant to this comment.
§375.402
The Board adopts new §375.402 (relating to Eligibility Requirements) to define those projects and activities that are eligible for this expedited application review, processing and closing process. All projects must be listed on an intended use plan for the Clean Water State Revolving Fund program and must further be related to the specific purposes of a special capitalization grant being implemented by the EPA or other federal agency through a capitalization grant agreement executed by and between the Board and the federal agency. Activities which are eligible for funding are broadly defined as any activities, including but not necessarily limited to, collection and distribution system upgrades, equipment upgrades and replacements, treatment system rehabilitation and improvements and other related activities that will address damage to or impairment of wastewater collection, distribution and treatment facilities.
§375.403
The Board adopts new §375.403 (relating to Intended Use Plan) to provide procedures to develop an IUP as necessary to implement any special capitalization grant. The intended use plan will identify those projects anticipated to receive assistance from funds available under the capitalization grant. The list of projects in the IUP, which shall be presented by priority ranking, may also serve as a project priority list if required by the capitalization grant. The adopted rule contains a nonsubstantive technical correction from the proposed rule in that "executive director" is replaced with "executive administrator" in subsection (f).
The commenter states, regarding §375.403(f), that it should identify that an expedited review will nonetheless be presented to the Board as contemplated in §371.406. The Board disagrees. Section 375.403(f) as proposed already requires approval by the Board of any revised process used to expedite the rating process. Section 375.406, on the other hand, has to do with action by the Board to commit funding to individual applications, rather than the process by which those applications are ranked prior to processing the applications for consideration by the Board. No change is made pursuant to this comment.
§375.404
The Board adopts new §375.404 (relating to Applicable Rules) to provide that the rules governing applications for funding from the state's Drinking Water State Revolving Fund will be generally applicable to an application for expedited review, processing and closing under this subchapter, except as provided otherwise in this subchapter.
§375.405
The Board adopts new §375.405 (relating to Review of Applications by Executive Administrator) to explain the manner in which the staff intends to review and process the applications seeking expedited review. The executive administrator shall review each application to determine whether it is administratively complete and shall request any additional information needed in order to process the application as soon as practicable. Such information shall be provided within the timeframe specified by the executive administrator. Once administratively and technically complete, the application will be scheduled for Board consideration.
§375.406
The Board adopts new §375.406 (relating to Formal Action by the Board) to specify the manner in which applications undergoing expedited review and processing under this subchapter will be considered by the Board. The executive administrator shall present the application to the Board as soon as practicable after the application has been deemed administratively complete, the project has been deemed eligible for funding and the project has been deemed to be technically feasible.
The applicant and other interested parties known to the Board will be notified of the time and place of the Board meeting prior to the meeting and arguments both for and against the issuance of the loan commitment may be made at that time. At the conclusion of the meeting, the Board will have the authority to approve, disapprove, amend or continue consideration of the application. The Board may only approve the application if it finds that the revenue and/or taxes pledged by the applicant will be sufficient to meet any loan obligations assumed by the applicant. The commitment will specify the applicable commitment period, after which time the commitment expires.
The commenter states, regarding §375.406(a), that the provision ensuring evidence and arguments are heard should be mandatory. The Board disagrees with this comment because there is no requirement, statutory or otherwise, that the Board hear evidence and arguments or hold a contested case hearing on an application for financial assistance. The Board, however, considers applications for funding in open meetings where the public may present comments. No change is made pursuant to this comment. §375.407.
The Board adopts new §375.407 (relating to Lending Rates) to define pertinent terms and to establish the procedures that will be used to set lending rates for projects consistent with the terms of a special capitalization grant. In establishing the procedure to be used to set rates for applications processed under this subchapter, the executive administrator shall consider factors that include, but are not necessarily limited to, the appropriate market rate for the borrower, the amount of adjustment from the market interest rate that may be appropriate for the borrower, any interest rate adjustment to the market rate for the borrower that may be required in order to determine the loan interest rate, and the manner in which that loan interest rate should be applied to the proposed principal schedule. In terms of timing, the executive administrator will set rates for loans on a date that is five (5) business days prior to the adoption of the political subdivision's bond ordinance or resolution or the execution of a loan agreement; and not more than 45 days before the anticipated closing of the loan from the Board. After 45 days from the assignment of the interest rate on the loan, the rates may only be extended with the executive administrator's approval.
§375.408
The Board adopts new §375.408 (relating to Waiver of Rules) to allow the provisions of this chapter to be waived or modified by the executive administrator as necessary and appropriate to implement the terms of the special capitalization grant or to comply with the conditions of the capitalization grant agreement. The Board must find that all waivers or modifications of this subchapter are necessary and appropriate to implement the terms of the special capitalization grant or to comply with the conditions of the capitalization grant agreement prior to approving an application for financial assistance using this expedited review, processing and closing process.
The commenter states, regarding §375.408(a), that in accepting special capitalization grants and in negotiating their terms, the Board should clearly be an active participant and act separately on each item requiring a waiver of any portion of this subchapter. The Board makes no changes to the rule as proposed. The proposed rule includes a requirement that the Board must find that all waivers or modifications of this subchapter are necessary and appropriate to implement the terms of the special capitalization grant or to comply with the conditions of the capitalization grant agreement prior to approving an application for financial assistance using this expedited review, processing and closing process. The Board is an active participant insofar as the Board provides direction to the executive administrator through its rules and through its discussions at Board meetings. The executive administrator is expected to coordinate closely with the Board in modifying policies and procedures. The coordination will be in open meeting. The executive administrator is statutorily authorized to perform the Board's administrative functions with the direction of the Board.
The commenter states, regarding §375.408(b), that any finding by the Board to support any waiver should require the Board specify and explain its reasons and findings. It is current practice that the Board bases its findings on sufficient reasons. The reasons for the Board's findings are a matter of record, including the Executive Administrator's memoranda to the Board, and are listed in the Board's Resolutions that are issued to make commitments to financial assistance. No change is made pursuant to this comment.
SUBCHAPTER A. GENERAL PROVISIONS
DIVISION 1. INTRODUCTORY PROVISIONS
Statutory authority: Texas Water Code §6.101 and §15.605.
Cross reference to statute: Texas Water Code, Chapter 15, Subchapter J.
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 26, 2009.
TRD-200901212
Kenneth L. Petersen
General Counsel
Texas Water Development Board
Effective date: April 15, 2009
Proposal publication date: January 30, 2009
For further information, please call: (512) 463-8061
Statutory authority: Texas Water Code §6.101 and §15.605.
Cross reference to statute: Texas Water Code, Chapter 15, Subchapter J.
§375.403.Intended Use Plan.
(a) The board shall prepare an intended use plan to meet the requirements of the capitalization grant. The intended use plan (IUP) will identify those projects anticipated to receive assistance from funds available under the capitalization grant. The list of projects in the IUP, which shall be presented by priority ranking, may also serve as a project priority list if required by the capitalization grant.
(b) The process for listing projects in the intended use plan shall be as follows.
(1) As necessary, the executive administrator will provide written notice and solicit project information from entities desiring to receive funding commitments. The notice shall include the form(s) to be used to submit information needed to rate the project and the deadline by which such rating information must be submitted in order for the project to be rated and included in the intended use plan. The required project information shall include, at a minimum, the following:
(A) the information needed to rate the project;
(B) a description of the proposed facilities;
(C) a description of any required permits, licenses, registrations and other legal authorizations, including any projected effluent limitations that may be required in any permit or registration issued by the Texas Commission on Environmental Quality (TCEQ) or the EPA;
(D) the estimated total project cost;
(E) an estimated schedule for construction of the proposed project;
(F) whether the applicant is under enforcement by the TCEQ or the EPA;
(G) for those potential applicants with existing populations of 25,000 or fewer, information regarding whether the community is eligible to receive funding as a disadvantaged community as defined in §375.19 of this chapter (relating to Financial assistance for projects benefiting disadvantaged communities); and
(H) such other information as may be requested by the executive administrator.
(2) The required information must be submitted not later than the deadline specified in the written notice.
(c) Subsequent to adoption of an intended use plan, the nature of a proposed project included in the intended use plan may change with written approval of the executive administrator consistent with the terms of the capitalization grant.
(d) If any changes are proposed to the project which would result in a change to the rating score, the project must be re-ranked in the intended use plan. In this case, the availability of funds will be determined based on the revised rating score.
(e) The intended use plan will be presented for adoption to the board at a scheduled meeting at which time the board will receive public comment before adopting the plan. Notice of this meeting shall be afforded to the public, the applicant and other known, interested parties prior to the Board meeting at which the intended use plan will be considered for adoption.
(f) The executive administrator may revise the rating process established in §375.16 of this chapter (relating to Rating Process) for those applicants seeking an expedited review under this subchapter provided that this revised process is consistent with the capitalization grant and is approved by the board.
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 26, 2009.
TRD-200901213
Kenneth L. Petersen
General Counsel
Texas Water Development Board
Effective date: April 15, 2009
Proposal publication date: January 30, 2009
For further information, please call: (512) 463-8061