PART 10. TEXAS WATER DEVELOPMENT BOARD

CHAPTER 371. DRINKING WATER STATE REVOLVING FUND

The Texas Water Development Board (Board) proposes amendments to Chapter 371, Subchapter B, §371.20, concerning Intended Use Plan, §371.24, concerning Disadvantaged Community Program through Loan Subsidies, and §371.25, concerning Criteria and Methods for Distribution of Funds for Disadvantaged Communities; Subchapter C, §371.39, concerning Review of Applications by the Executive Administrator; Subchapter D, §371.52, concerning Lending Rates; and Subchapter I, §§371.200 - 371.208, concerning Applications for Financial Assistance Filed in Response to Special Capitalization Grants.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULE AMENDMENTS.

The American Recovery and Reinvestment Act of 2009 ("ARRA") provides funding under a strict time constraint. Any funded project that is not "under contract or construction" prior to February 17, 2010 will have its funding revoked and reallocated to other states. Accordingly, the Board proposes changes to the rules governing the Drinking Water State Revolving Fund (DWSRF) to better ensure that all projects listed above the ARRA DWSRF intended use plan ("IUP") funding line will be able to commence construction or be under contract by the February deadline. It is in the state's interest to ensure that provisional unlisted projects are standing by in the event it becomes clear a listed project will not meet the strict deadline. In that instance, a listed project would be de-listed, and a "ready to proceed" unlisted provisional project will be substituted, in order to ensure that Texas does not lose federal funding. To encourage prospective applicants to prepare a provisional application, a zero-percent interest loan will be made available to applicants who undertake the time and expense to prepare a "ready to proceed" application but subsequently fail to qualify for ARRA DWSRF funding.

In addition to provisional projects, some projects will rest "on the funding line" whereby there are insufficient funds in the federal grant to cover the entire project. It is in the state's interest to ensure that all funds in the federal grant are used, and for applicants whose projects fall "on the funding line," the state will first calculate the total amount of additional funds necessary to fund all projects on the funding line, and then redistribute ARRA funds from those projects that have 0.0% ARRA loan fund allocations to those that have ARRA grant fund allocations in order to fully fund all ARRA projects eligible for grants. Then the amount necessary to fund the resulting revised ARRA loan funds for those projects on the funding line will be supplemented with FY2010 DWSRF funds. The total amount of 2010 DWSRF funds necessary will equal the original total of the portions of projects on the funding line that were in excess of the original ARRA DWSRF allocations.

SECTION BY SECTION DISCUSSION.

Sections 371.20(e), 371.24(f), 371.25(a), 371.39(c), 371.52(h), 371.201, 371.203(g), 371.207(c) and (d).

These amended rules allow the executive administrator to earmark projects for 0.0% interest loans in two circumstances. First, the amended rules allow the executive administrator to designate a project as "provisional". In the context of the DWSRF ARRA stimulus grant, the Board proposes to have alternative projects ("provisional projects") standing by and ready to proceed in the event it becomes clear that a listed project cannot make the strict time constraints of the federal stimulus bill. Applicants whose projects are listed as provisional are asked to prepare applications in anticipation of being selected to replace a project that fails to proceed in a timely fashion. The rules provide that applicants that are invited to prepare "ready to proceed" applications but subsequently are not invited to apply for special capitalization grant funding will receive invitations to apply for 0.0% interest loans from the regular DWSRF program with priority consideration.

Second, the amended rules allow the executive administrator to provide priority consideration under the regular DWSRF program for projects that fall on the special capitalization grant funding line. When the special capitalization grant funds reach their limit, and a project is left with only partial funding under the grant, the amended rules permit the executive administrator to give priority consideration to those applicants to fund the remaining portion of their project with a 0.0% interest loan from the base DWSRF program following a redistribution of funds within the ARRA allocations in order to fully fund those projects eligible for ARRA grants.

Provisional projects and partially funded projects are defined in §371.201(2) and (3). The executive administrator is given authority to designate a project as such under §371.203(g). The executive administrator is given authority to add these projects to the regular DWSRF program intended use plan under §371.207(c) and (d). Sections 371.20(e), 371.24(f), 371.25(a) and 371.52(h) amend the rules for the regular DWSRF program to include and prioritize provisional and partially funded projects. Section 371.39(c) ensures that these projects will abide by any applicable special capitalization grant requirements in case of mixed funding.

Sections 371.200 - 371.208.

The sections of Subchapter I use the phrase "capitalization grant" to refer to "special" capitalization grants. A special capitalization grant is "funded by special appropriation enacted by the United States Congress for any special purpose, including, but not limited to, to respond to emergency events or to implement an economic recovery program." The phrase "capitalization grant" has been amended to "special capitalization grant" throughout Subchapter I to more accurately distinguish these grants from the standard capitalization grants under the regular DWSRF program.

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENTS.

Ms. Amanda Lavin, Deputy Executive Administrator for Project Finance, has determined that there will be no fiscal implications for state or local governments as a result of the proposed rulemaking.

PUBLIC BENEFITS AND COSTS.

Ms. Lavin has also determined that for each year of the first five years the proposed rulemaking is in effect, the public will benefit from the rulemaking because it will improve the Board's ability to timely process special federal capitalization grants to implement infrastructure improvements for public water systems and will impose no new requirements on the public or persons required to comply with the rules.

LOCAL EMPLOYMENT IMPACT STATEMENT.

The Board has determined that a local employment impact statement is not required because the proposed rules do not adversely affect a local economy in a material way for the first five years that the proposed rules are in effect because it will impose no new requirements on local economies.

The Board has determined that there will be no adverse economic effect on small businesses or micro-businesses as a result of enforcing this rulemaking. The Board has also determined that there is no anticipated economic cost to persons who are required to comply with the rulemaking as proposed. Therefore, no regulatory flexibility analysis is necessary.

REGULATORY IMPACT ANALYSIS.

The Board has determined that the proposed rulemaking is not subject to Government Code §2001.0225 because it is not a major environmental rule under that section.

TAKINGS IMPACT ASSESSMENT.

The Board has determined that the promulgation and enforcement of these proposed rule amendments will constitute neither a statutory nor a constitutional taking of private real property. The proposed rule amendments do not adversely affect a landowner's rights in private real property, in whole or in part, temporarily or permanently, because these proposed rule amendments do not burden nor restrict or limit the owner's right to property. Therefore, the proposed amendments do not constitute a taking under Texas Government Code, Chapter 2007.

SUBMITTAL OF COMMENTS.

Comments on the proposed rulemaking will be accepted for 30 days following publication and may be submitted to Legal Services, Texas Water Development Board, P.O. Box 13231, Austin, Texas 78711-3231, rulescomments@twdb.state.tx.us, or by fax at (512) 463-5580.

SUBCHAPTER B. PROGRAM REQUIREMENTS

31 TAC §§371.20, 371.24, 371.25

STATUTORY AUTHORITY

The amendments are proposed 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.

Cross reference to statute: Texas Water Code Chapters 15, 16, and 17.

§371.20.Intended Use Plan.

(a) - (d) (No change.)

(e) Provisional projects or partially funded projects that are identified under §371.207(c) and (d) of this title (relating to Lending Rates) will receive priority consideration for financing under the intended use plan.

§371.24.Disadvantaged Community Program through Loan Subsidies.

(a) - (e) (No change.)

(f) Total Amount of Subsidies. For each fiscal year, the total amount of loan subsidies made by the board under this section and under §371.52 of this title (relating to Lending Rates) for provisional projects and partially funded projects may not exceed 30% of the amount of the capitalization grant received by the board for that year.

(g) (No change.)

§371.25.Criteria and Methods for Distribution of Funds for Disadvantaged Communities.

(a) The board will determine annually the amount of capitalization grant funds to be made available for projects for disadvantaged communities and will include this information in the intended use plan, provided however that no more than 30% of the capitalization grant for that fiscal year can be [so] distributed for disadvantaged communities and provisional projects and partially funded projects under §371.52 of this title (relating to Lending Rates). Funds available may include funds made available for disadvantaged communities in prior years' intended use plans and disadvantaged communities' funds which have become de-obligated from prior obligations or commitments.

(b) - (j) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902948

Kenneth L. Petersen

General Counsel

Texas Water Development Board

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 463-8061

31 TAC §371.39

STATUTORY AUTHORITY

The amendment is proposed 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.

Cross reference to statute: Texas Water Code Chapters 15, 16, and 17.

§371.39.Review of Applications by the Executive Administrator.

(a) - (b) (No change.)

(c) The executive administrator shall ensure that applications for partially funded projects under §371.207(d) of this title (relating to Lending Rates) include any additional information necessary to comply with requirements for mixed funding applicable under a special capitalization grant.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902949

Kenneth L. Petersen

General Counsel

Texas Water Development Board

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 463-8061

31 TAC §371.52

STATUTORY AUTHORITY

The amendment is proposed 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.

Cross reference to statute: Texas Water Code Chapters 15, 16, and 17.

§371.52.Lending Rates.

(a) - (g) (No change.)

(h) Provisional projects and partially funded projects. Provisional projects and partially funded projects designated under §371.207(c) and (d) of this title (relating to Lending Rates) will receive a 0.0% interest rate. In addition to the 0.0% interest rate, disadvantaged community projects that also qualify as provisional projects or partially funded projects also may qualify for principal forgiveness under §371.24 of this title (relating to Disadvantaged Community Program through Loan Subsidies).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902950

Kenneth L. Petersen

General Counsel

Texas Water Development Board

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 463-8061

31 TAC §§371.200 - 371.208

STATUTORY AUTHORITY

The amendments are proposed 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.

Cross reference to statute: Texas Water Code Chapters 15, 16, and 17.

§371.200.Purpose.

It is the purpose of this subchapter to specify flexibility in providing financial assistance made available under a special capitalization grant as necessary and appropriate to the terms of that special capitalization grant or the requirements of any special capitalization grant agreement to the greatest extent necessary. The provisions of this subchapter should be interpreted and applied in order to fully utilize the funds made available for the benefit of the state and its political subdivisions.

§371.201.Definitions.

In addition to the definitions at §371.2 of this title (relating to Definitions [Definition] of Terms), the following terms, when used in this subchapter, shall have the following meanings:

[(1) Capitalization grant--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.]

(1) [(2)] Emergency event--A natural disaster such as a hurricane, tornado, significant flooding event, prolonged drought or other natural disaster or a man-made disaster, an act of terrorism or an enemy attack that results in damage to or impairment of a public water supply system.

(2) Partially funded project--A project above the special capitalization grant intended use plan funding line that cannot be fully funded due to the unavailability of special capitalization grant funds.

(3) Provisional project--A project in the special capitalization grant intended use plan that is listed below the funding line, and that is designated by the executive administrator as a project that may submit a complete application in anticipation of possible funding in the event one or more projects above the funding line fail to qualify for funding under the special capitalization grant.

(4) [(3)] Ready to proceed--A project has all of the approvals required in this chapter needed in order to commence construction.

(5) Special capitalization grant--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.

§371.202.Eligibility Requirements.

(a) - (b) (No change.)

(c) Specific eligibility requirements may be specified by the executive administrator consistent with the terms of the special capitalization grant.

§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 special capitalization grant. The IUP will identify those projects anticipated to receive assistance from funds available under the special 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 special capitalization grant.

(b) (No change.)

(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 special capitalization grant. [:]

(d) - (e) (No change.)

(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 special capitalization grant and is approved by the board.

(g) The executive administrator may at any time designate a project listed below the funding line in the special capitalization grant intended use plan as a provisional project.

§371.204.Applicable Rules.

(a) An application shall comply with the requirements of [Chapter 371,] Subchapters A - H of this chapter, 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) (No change.)

(2) that the project is consistent with the purposes of the special capitalization grant, as defined by terms of the special capitalization grant agreement and as determined by the board;

(3) (No change.)

(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 special capitalization grant;

(5) - (6) (No change.)

§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 special 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.

§371.206.Formal Action by the Board.

(a) - (b) (No change.)

(c) Commitment period. Loan approval action will specify the commitment period consistent with the terms of the special capitalization grant, after which time the commitment shall expire.

§371.207.Lending Rates.

(a) Procedure for setting interest rates.

(1) The executive administrator shall establish a procedure to set a lending rate for projects that is consistent with the terms of the special capitalization grant, to be considered by the board in approving the application.

(2) - (4) (No change.)

(b) The board, based on the procedure established by the executive administrator under subsection (a) of this section, will 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 special capitalization grant.

(c) The executive administrator may place a provisional project on the intended use plan of a capitalization grant administered under Subchapters A - H of this chapter.

(d) The executive administrator may place a partially funded project on the intended use plan of a capitalization grant administered under Subchapters A - H of this chapter.

§371.208.Waiver of Rules.

(a) Any of the provisions of this subchapter may 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 requirements of the special capitalization grant agreement.

(b) 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 requirements of the special capitalization grant agreement prior to approving an application for financial assistance.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902951

Kenneth L. Petersen

General Counsel

Texas Water Development Board

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 463-8061

The Texas Water Development Board (Board) proposes amendments to Chapter 375, §375.16, concerning Rating Process, §375.38, concerning Review of Applications by the Executive Administrator, §375.52, concerning Lending Rates, §§375.400 - 375.404 and §§375.406 - 375.408, concerning Applications for Financial Assistance Filed in Response to Special Capitalization Grants.

BACKGROUND AND SUMMARY OF THE FACTUAL BASIS FOR THE PROPOSED RULE AMENDMENTS.

The American Recovery and Reinvestment Act of 2009 ("ARRA") provides funding under a strict time constraint. Any funded project that is not "under contract or construction" prior to February 17, 2010 will have its funding revoked and reallocated to other states. Accordingly, the Board proposes changes to the rules governing the Clean Water State Revolving Fund (CWSRF) to better ensure that all projects listed above the ARRA CWSRF intended use plan ("IUP") funding line will be able to commence construction or be under contract by the February deadline. It is in the state's interest to ensure that provisional unlisted projects are standing by in the event it becomes clear a listed project will not meet the strict deadline. In that instance, a listed project would be de-listed, and a "ready" unlisted provisional project will be substituted, in order to ensure that Texas does not lose federal funding. To encourage prospective applicants to prepare a provisional application, a zero-percent interest loan will be made available to applicants who undertake the time and expense to prepare a "ready to proceed" application but subsequently fail to qualify for ARRA CWSRF funding.

In addition to provisional projects, some projects will rest "on the funding line" whereby there are insufficient funds in the federal grant to cover the entire project. It is in the state's interest to ensure that all funds in the federal grant are used, and for applicants whose projects fall "on the funding line," the state will first calculate the total amount of additional funds necessary to fund all projects on the funding line, and then redistribute ARRA funds from those projects that have 0.0% ARRA loan fund allocations to those that have ARRA grant fund allocations in order to fully fund all ARRA projects eligible for grants. Then the amount necessary to fund the resulting revised ARRA loan funds for those projects on the funding line will be supplemented with FY2010 CWSRF funds. The total amount of 2010 CWSRF and DWSRF funds necessary will equal the original total of the portions of projects on the funding line that were in excess of the original ARRA allocations.

PROPOSED AMENDED RULES IN CHAPTER 375.

Sections 375.16, 375.38, 375.52, 375.401, 375.403, and 375.407.

The amendments to §§375.16(h), 375.38(c), 375.52(f), 375.401, 375.403(g), and 375.407(c) and (d), allow the executive administrator to designate projects for 0.0% interest loans in two circumstances. First, the amended rules allow the executive administrator to designate a project as "provisional". In the context of the CWSRF ARRA stimulus grant, the Board proposes to have alternative projects ("provisional projects") standing by and ready to proceed in the event it becomes clear that a project listed above the ARRA IUP funding line cannot make the strict time constraints of the federal stimulus bill. Applicants whose projects are listed as provisional are asked to prepare applications in anticipation of being selected to replace a project that fails to proceed in timely fashion. The rules provide that applicants that are invited to prepare "ready to proceed" applications but subsequently are not invited to apply for special capitalization grant funding will receive invitations to apply for 0.0% interest loans from the CWSRF program with priority consideration.

Second, the amended rules allow the executive administrator to provide priority consideration under the program for projects that fall on the special capitalization grant funding line. When the special capitalization grant funds reach their limit, and a project is left with only partial funding, the amended rules permit the executive administrator to give priority consideration to those applicants to fund the remaining portion of their project with a 0.0% interest loan from the base CWSRF program following a redistribution of funds within the ARRA allocations in order to fully fund those projects eligible for ARRA grants.

Provisional projects and partially funded projects are defined in §375.401. The executive administrator is given authority to designate a project as such under §375.403(g). The executive administrator is given authority to add these projects to the regular CWSRF program intended use plan under §375.407(c) and (d). Section 375.16(h) and §375.52(f) amend the rules for the regular CWSRF base program to include and prioritize provisional and partially funded projects. Section 375.38(c) ensures that these projects will abide by any applicable special capitalization grant requirements.

Sections 375.400 - 375.404 and 375.406 - 375.408.

The sections of Subchapter D use the phrase "capitalization grant" to refer to "special" capitalization grants. A special capitalization grant is "funded by special appropriation enacted by the United States Congress for any special purpose, including, but not limited to, to respond to emergency events or to implement an economic recovery program." The phrase "capitalization grant" has been amended to "special capitalization grant" throughout Subchapter D to more accurately distinguish these grants from the standard capitalization grants under the regular CWSRF program.

FISCAL NOTE: COSTS TO STATE AND LOCAL GOVERNMENTS.

Ms. Amanda Lavin, Deputy Executive Administrator for Project Finance, has determined that there will be no fiscal implications for state or local governments as a result of the proposed rulemaking.

PUBLIC BENEFITS AND COSTS.

Ms. Lavin has also determined that for each year of the first five years the proposed rulemaking is in effect, the public will benefit from the rulemaking because it will improve the Board's ability to timely process special federal capitalization grants to implement infrastructure improvements that better protect water quality and will impose no new requirements on the public or persons required to comply with the rules.

LOCAL EMPLOYMENT IMPACT STATEMENT.

The Board has determined that a local employment impact statement is not required because the proposed rules do not adversely affect a local economy in a material way for the first five years that the proposed rules are in effect because it will impose no new requirements on local economies.

The Board has determined that there will be no adverse economic effect on small businesses or micro-businesses as a result of enforcing this rulemaking. The Board has also determined that there is no anticipated economic cost to persons who are required to comply with the rulemaking as proposed. Therefore, no regulatory flexibility analysis is necessary.

REGULATORY IMPACT ANALYSIS.

The Board has determined that the proposed rulemaking is not subject to Government Code §2001.0225 because it is not a major environmental rule under that section.

TAKINGS IMPACT ASSESSMENT.

The Board has determined that the promulgation and enforcement of these proposed rule amendments will constitute neither a statutory nor a constitutional taking of private real property. The proposed rule amendments do not adversely affect a landowner's rights in private real property, in whole or in part, temporarily or permanently, because these proposed rule amendments do not burden nor restrict or limit the owner's right to property. Therefore, the proposed amendments do not constitute a taking under Texas Government Code, Chapter 2007.

SUBMITTAL OF COMMENTS.

Comments on the proposed rulemaking will be accepted for 30 days following publication and may be submitted to Legal Services, Texas Water Development Board, P.O. Box 13231, Austin, Texas 78711-3231, rulescomments@twdb.state.tx.us, or by fax at (512) 463-5580.

SUBCHAPTER A. GENERAL PROVISIONS

DIVISION 2. PROGRAM REQUIREMENTS

31 TAC §375.16

STATUTORY AUTHORITY

The amendments are proposed 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.

Cross reference to statute: Texas Water Code Chapters 15, 16, and 17.

§375.16.Rating Process.

(a) - (g) (No change.)

(h) Provisional projects or partially funded projects that are designated under §375.407(c) and (d) of this title (relating to Lending Rates) will receive priority consideration for a 0.0% interest loan under the intended use plan.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902955

Kenneth L. Petersen

General Counsel

Texas Water Development Board

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 463-8061

31 TAC §375.38

STATUTORY AUTHORITY

The amendments are proposed 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.

Cross reference to statute: Texas Water Code Chapters 15, 16, and 17.

§375.38.Review of Applications by the Executive Administrator.

(a) - (b) (No change.)

(c) The executive administrator shall ensure that applications for partially funded projects designated under §375.407(d) of this title (relating to Lending Rates) include any additional information necessary to comply with requirements for mixed funding applicable under a special capitalization grant.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902952

Kenneth L. Petersen

General Counsel

Texas Water Development Board

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 463-8061

31 TAC §375.52

STATUTORY AUTHORITY

The amendments are proposed 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.

Cross reference to statute: Texas Water Code Chapters 15, 16, and 17.

§375.52.Lending Rates.

(a) - (e) (No change.)

(f) Provisional projects and partially funded projects. Provisional projects and partially funded projects that are designated under §375.407(c) and (d) of this title (relating to Lending Rates) will receive a 0.0% interest rate.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902953

Kenneth L. Petersen

General Counsel

Texas Water Development Board

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 463-8061

31 TAC §§375.400 - 375.404, 375.406 - 375.408

STATUTORY AUTHORITY

The amendments are proposed 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.

Cross reference to statute: Texas Water Code Chapters 15, 16, and 17.

§375.400.Purpose.

It is the purpose of this subchapter to specify flexibility in providing financial assistance made available under a special capitalization grant as necessary and appropriate to the terms of that special capitalization grant or the requirements of any special capitalization grant agreement to the greatest extent necessary. The provisions of this subchapter should be interpreted and applied in order to fully utilize the funds made available for the benefit of the state and its political subdivisions.

§375.401.Definitions.

In addition to the definitions at §375.2 of this chapter (relating to Definitions of Terms), the following terms, when used in this subchapter, shall have the following meanings:

[(1) Capitalization grant--A capitalization grant funded by special appropriation enacted by the United States Congress for any special purpose, including, but not limited to, to respond to emergency events or to implement an economic recovery program.]

(1) [(2)] Emergency event--A natural disaster such as a hurricane, tornado, significant flooding event, prolonged drought, earthquake or other natural disaster or man-made disaster such as an act of terrorism or an enemy attack that results in damage to or impairment of a publicly-owned wastewater collection, distribution and treatment system.

(2) Partially funded project--A project above the special capitalization grant intended use plan funding line that cannot be fully funded due to the unavailability of special capitalization grant funds.

(3) Provisional project--A project in the special capitalization grant intended use plan that is listed below the funding line, and that is designated by the executive administrator as a project that may submit a complete application in anticipation of possible funding in the event one or more projects above the funding line fail to qualify for funding under the special capitalization grant.

(4) [(3)] Ready to proceed--A project that has all of the approvals required in this chapter needed in order to commence construction.

(5) Special capitalization grant--A capitalization grant funded by special appropriation enacted by the United States Congress for any special purpose, including, but not limited to, to respond to emergency events or to implement an economic recovery program.

§375.402.Eligibility Requirements.

(a) - (b) (No change.)

(c) Specific eligibility requirements may be specified by the executive administrator consistent with the terms of the special capitalization grant.

§375.403.Intended Use Plan.

(a) The board shall prepare an intended use plan to meet the requirements of the special capitalization grant. The intended use plan (IUP) will identify those projects anticipated to receive assistance from funds available under the special 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 special capitalization grant.

(b) (No change.)

(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 special capitalization grant.

(d) - (f) (No change.)

(g) The executive administrator may at any time designate a project listed below the funding line in the special capitalization grant intended use plan as a provisional project.

§375.404.Applicable Rules.

(a) (No change.)

(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) (No change.)

(2) that the project is consistent with the purposes of the special capitalization grant, as defined by terms of the special capitalization grant agreement and as determined by the board;

(3) (No change.)

(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 special capitalization grant;

(5) - (6) (No change.)

§375.406.Formal Action by the Board.

(a) - (b) (No change.)

(c) Commitment period. Loan approval action will specify the commitment period consistent with the terms of the special capitalization grant, after which time the commitment shall expire.

§375.407.Lending Rates.

(a) Procedure for setting interest rates.

(1) The executive administrator shall establish a procedure to set a lending rate for projects that is consistent with the terms of the special capitalization grant, to be considered by the board in approving the application.

(2) - (4) (No change.)

(b) The board, based on the procedure established by the executive administrator under subsection (a) of this section, will 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 special capitalization grant.

(c) The executive administrator may place a provisional project on the intended use plan of a capitalization grant administered under Subchapters A, B, and C of this chapter.

(d) The executive administrator may place a partially funded project on the intended use plan of a capitalization grant administered under Subchapters A, B, and C of this chapter.

§375.408.Waiver of Rules.

(a) Any of the provisions of this subchapter may 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 requirements of the special capitalization grant agreement.

(b) 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 requirements of the special capitalization grant agreement prior to approving an application for financial assistance.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902954

Kenneth L. Petersen

General Counsel

Texas Water Development Board

Earliest possible date of adoption: August 30, 2009

For further information, please call: (512) 463-8061

CHAPTER 529. FLOOD CONTROL

SUBCHAPTER A. OPERATION AND MAINTENANCE GRANT PROGRAM

31 TAC §§529.1 - 529.8

The Texas State Soil and Water Conservation Board (State Board or agency) proposes new Chapter 529, Flood Control, to include new §§529.1 - 529.8, concerning the administration of a state-funded grant program to assist soil and water conservation districts in performing operation and maintenance of flood control dams.

Nearly 2,000 floodwater retarding structures, or dams, have been built over the last 60 years within the State of Texas. The primary purpose of the structures is to protect lives and property by reducing the velocity of floodwaters, and thereby releasing flows at a safer rate. These are earthen dams that exist on private property, and were designed and constructed by the United States Department of Agriculture - Natural Resources Conservation Service (USDA-NRCS). They were built with the understanding that the private property owner would provide the land, the federal government would provide the technical design expertise and the funding to construct them, and then units of local government would be responsible for maintaining them into the future.

Local sponsors of the dams were required before a federal project was begun. Local sponsors signed a watershed agreement which outlined the duties and responsibilities of the federal and local sponsors. In general, local sponsors are required to obtain and enforce easements, conduct operation and maintenance (O&M) inspections, maintain the structures, and implement land treatment measures in the watershed. Soil and water conservation districts (SWCD) are one of the local sponsors in all watershed projects. Other local sponsors include counties, cities, and Water Control and Improvement Districts (WCIDs).

Due to the passage of time and difficulty in raising adequate funds locally, many SWCDs and other sponsors approached the State Board and expressed their concerns over the amount of needed O&M on flood control dams. In recognition that these dams will continue to serve as a critical protection for our state's infrastructure, private property, and lives, the State Board proposes a grant program to assist local SWCDs and other sponsors in carrying out their responsibilities regarding O&M with funding appropriated by the Texas Legislature for the 2010-2011 biennium. Proposed new §529.1, Statutory Authority and Policy Statement, would explain the agency's intent and authority for administering an O&M Grant Program through local SWCDs.

Proposed new §529.2, Definitions, would provide a list of terms and their definitions for the purposes of new Chapter 529.

Proposed new §529.3, Administration of Funds, would establish general fiscal provisions that would apply to the program, explain the program's sources of funding, establish provisions for the allocation reimbursement of funds to local SWCDs, identify which activities would be eligible for reimbursement, establish that the program would require a 10-percent non-state funded matching provision, establish and characterize the types of "in-kind" contributions that may be used to satisfy the 10-percent non-state match requirement, and allow for the reimbursement of local SWCD administrative costs.

Proposed new §529.4, Applicability, would establish that only eligible SWCDs will be provided an allocation of funding for performing O&M activities, but would provide a mechanism that allows for other local sponsors of flood control dams to receive an eligible SWCD's allocation if the SWCD provides a written request to transfer the allocation.

Proposed new §529.5, Allocation of Funds, would establish the criteria under which the State Board would make funding allocations, explain that prioritization of O&M activities would be conducted by local sponsors, explain that the State Board will notify eligible SWCDs of funding allocations in writing, establish that the State Board would adjust allocations within a fiscal year based on needs and the availability of funds, establish that allocations are effective for a fixed period of time within a fiscal year, explain that the State Board may execute a contract with an eligible SWCD for the performance of O&M activities, and provide for the allocation of funding to eligible SWCDs to address emergency situations.

Proposed new §529.6, Solicitation of Bids by Eligible SWCDs, would establish that bids are required for SWCD purchases that exceed $50,000 in accordance with provisions of §271.024 of the Local Government Code.

Proposed new §529.7, Reimbursements and Reporting Non-State Funded Match, would require that requests for reimbursement must be submitted on forms provided by the State Board, O&M agreements between local sponsors, as defined by §529.2, must exist and be submitted to the State Board prior to reimbursement, establish the conditions under which the State Board would consider making payment, require that in-kind contributions be reported on reimbursement requests, establish that the program is only a reimbursement based program, and that the State Board may allow for the purchasing of easements at their discretion. Proposed new §529.7 would also establish that eligible SWCDs must certify that the activities that are requested to be reimbursed were performed to the SWCD's satisfaction prior to submitting the request to the State Board.

Proposed new §529.8, Technical Standards for O&M Activities, would establish that the State Board may adopt technical standards for certain O&M activities which must be attained in order for reimbursement to be approved.

Mr. Kenny Zajicek, Fiscal Officer, Texas State Soil and Water Conservation Board, has determined that for the first five year period there will be no fiscal implications for state or local government as a result of administering these new rules. The local match required to receive funds under this program represent local monies already being raised locally and used for O&M activities and participation is voluntary.

Mr. Kenny Zajicek has also determined that for the first five year period these new rules are in effect, the public benefit anticipated as a result of administering these new rules will be an understanding of the administrative requirements associated with grant funds available through the State Board for performing O&M activities.

There is no anticipated cost to small businesses or individuals resulting from these amended rules.

Comments on the proposed new rules may be submitted in writing to Rex Isom, Executive Director, Texas State Soil and Water Conservation Board, P.O. Box 658, Temple, Texas 76503, (254) 773-2250, ext. 231.

The new rules are proposed under the Agriculture Code of Texas, Title 7, Chapter 201, §201.020, which authorizes the Texas State Soil and Water Conservation Board to adopt rules that are necessary for the performance of its functions under the Agriculture Code.

No other statutes, articles, or codes are affected by this proposal.

§529.1.Statutory Authority and Policy Statement.

Pursuant to 201.001(d), Agriculture Code, the State Soil and Water Conservation Board is designated by the Texas Legislature as the state agency responsible for conserving soil and related resources of this state. Within this context, the State Board is charged with controlling and preventing soil erosion, controlling floods, preventing the impairment of dams and reservoirs, assisting in maintaining the navigability of rivers and harbors, and thereby protecting and promoting the health, safety, and general welfare of the people of this state. Consistent with this authority, it is the policy of the State Soil and Water Conservation Board to administer a grant program through local soil and water conservation districts that provides financial assistance for operation and maintenance activities on United States Department of Agriculture - Natural Resources Conservation Service assisted flood control dams. In accordance with this purpose, §§529.1 - 529.8 of this title (relating to Operation and Maintenance Grant Program) are adopted.

§529.2.Definitions.

The following words and terms, when used in this chapter, have the following meanings:

(1) Allocation--An amount of funding for a fiscal year specified and withheld by the State Board for an eligible soil and water conservation district for the reimbursement of operation and maintenance activities on flood control dams.

(2) Biennium--The period of time beginning September 1 of every odd numbered year and ending on August 31 twenty-four months later; a biennium includes two fiscal years as defined by this subchapter.

(3) Eligible soil and water conservation district (SWCD)--An SWCD that is listed as a sponsor on an O&M agreement for a watershed project.

(4) Fiscal year--The 12-month period of time beginning September 1 of a year and ending on August 31 of the following year.

(5) Flood control dam--Floodwater retarding structures, also commonly referred to as flood control structures, watershed structures, flood prevention or "FP" sites, and certain grade stabilization structures included in the National Inventory of Dams built by the federal government under one of the four following federal authorizations:

(A) Public Law 534 - Flood Control Act of 1944 (78th U.S. Congress),

(B) the Pilot Watershed Program approved by Congress in 1953,

(C) Public Law 566 approved by Congress in 1954 and amended by Public Law 1018 in 1956, and

(D) the Agriculture and Food Act of 1981 (Resource Conservation and Development, or RC&D).

(6) In-kind match--Non-monetary contributions of services, equipment, or other items of value reported to the State Board by eligible SWCDs for the purpose of satisfying all or a portion of a non-state funded matching requirement for reimbursement of an O&M activity. In-kind match may not be qualified if the source is contributing the in-kind match because it was enabled to do so directly through state appropriations.

(7) National Inventory of Dams--The U.S. Army Corps of Engineers' list of dams first authorized by the National Dam Inspection Act (Public Law 92-367) of 1972.

(8) Natural Resources Conservation Service (NRCS)--An agency of the United States Department of Agriculture which includes the agency formerly known as the Soil Conservation Service.

(9) Operation and maintenance (O&M)--The act of performing a specific set of activities associated with maintaining optimal physical conditions and functioning of a flood control dam. O&M is not an activity defined as structural repair. The State Board may adopt technical standards, as defined by this subchapter, for certain O&M activities which must be met prior to reimbursement being approved. Specific O&M activities include:

(A) removal of woody brush or other undesirable vegetation from dam embankments, spillways, and plunge basins,

(B) fence and/or gate installation to prevent the grazing of desirable vegetation and/or surface disturbance of dam embankments, spillways, and plunge basins,

(C) fence and/or gate repair to prevent the grazing of desirable vegetation and/or surface disturbance of dam embankments, spillways, and plunge basins,

(D) fence and/or gate removal for the purpose of installing new fencing and/or gate(s) to prevent grazing of desirable vegetation and/or surface disturbance of dam embankments, spillways, and plunge basins,

(E) establishment of desirable vegetation, including the fertilization of existing desirable vegetation, intended to stabilize the surface of dam embankments and spillways,

(F) repairing soil erosion damage on dam embankments and spillways resulting from lack of vegetative cover,

(G) clearing debris from principal and auxiliary spillway inlets,

(H) maintenance of and/or replacement of valves and trash guards,

(I) replacement of gate valve and stem on principal spillway,

(J) minor earth shaping and establishment of vegetation to repair a slope slide on a dam embankment,

(K) repair of wave erosion requiring minor earthwork and establishment of vegetation,

(L) repair of minor erosion from livestock and wildlife trailing on dam embankments or spillways,

(M) repair of erosion from vehicles on dam embankments or spillways,

(N) replacement of deteriorated corrugated metal pipe ends (tail pipes),

(O) repair of erosion in auxiliary (emergency) spillway from minor storm damage or livestock/wildlife trailing,

(P) any other activity approved by the State Board at their discretion if it is not defined as structural repair in this chapter; activities in this category must be approved by the State Board prior to performance of the activity to ensure reimbursement.

(10) O&M agreement--A written agreement pertaining to a specific flood control dam or dams within a watershed project, taking into consideration the powers and jurisdictional boundaries of sponsors, that specifies each sponsors' responsibilities for financing and performing O&M inspections and activities.

(11) O&M technical standard--An established norm or requirement in the form of a formal document establishing uniform engineering or technical criteria, methods, processes, and/or practices adopted by the State Board for a specific O&M activity. O&M activities for which the State Board has adopted an O&M technical standard must be performed in accordance with the technical standard prior to reimbursement being made.

(12) Reimbursement request--A request for reimbursement of a percentage of the costs associated with the performance of O&M activities.

(13) Soil and water conservation district (SWCD)--A governmental subdivision of this state and a public body corporate and politic, organized pursuant to Chapter 201 of the Agriculture Code.

(14) Sponsor--Any entity or individual that is a signatory to a watershed project plan, watershed agreement, or O&M agreement.

(15) State Board--The Texas State Soil and Water Conservation Board organized pursuant to Chapter 201 of the Agriculture Code.

(16) Texas Commission on Environmental Quality--The state agency created under Title 2, Subtitle A, Chapter 5 of the Texas Water Code (formerly the Texas Natural Resource Conservation Commission).

(17) Watershed agreement--A legal document that records the responsibilities of the sponsors and NRCS for implementing a watershed project plan relating to contributions of funding, the acquisition of land rights, construction, O&M, project administration, management of affected lands, as well as responsibilities regarding permitting and water and mineral rights.

(18) Watershed project--A geographic area delineated by the boundaries of a watershed within which a series of flood control dams have been constructed or are planned to be constructed by NRCS to prevent and/or minimize floodwater damage to lives and property.

(19) Watershed project plan--A plan developed by local sponsors with the assistance of NRCS for a watershed project that includes descriptions of the watershed, problems to be addressed, works of improvement to be installed, costs of installed works, project benefits, cost-benefit analyses, financing information, and general requirements for O&M.

§529.3.Administration of Funds.

(a) General Fiscal Provisions. Eligible SWCDs must comply with any applicable provisions within the Manual of Fiscal Operations for Soil and Water Conservation Districts at all times. The Manual of Fiscal Operations for Soil and Water Conservation Districts is approved and periodically amended by the State Board and is available on the State Board's website; hardcopies of this manual may be requested from the State Board.

(b) Sources of funding. Any funding available for O&M grants during a fiscal year will be determined by the State Board out of general revenue appropriated by the Texas Legislature. The amount of funding available for O&M grants will be determined by the State Board for a fiscal year. Other sources of funding may be used for O&M grants by the State Board if applicable and when available. Funds will be allocated by the State Board to eligible SWCDs for use during the fiscal year for which the funds were appropriated, unless the State Board has executed a contract with an eligible SWCD that allows for liquidation of the obligated amount over a period of time that extends beyond the fiscal year.

(c) Allocation and reimbursement. Funds will be administered through an allocation and reimbursement process as specified in §529.5 and §529.7 of this subchapter.

(d) Activities eligible for reimbursement. Funds may only be used to reimburse eligible SWCDs and subcontractors of their choosing for costs associated with the performance of O&M activities as defined by this subchapter on flood control dams. Eligible SWCDs desiring reimbursement of any activity not specifically listed as an O&M activity in §529.2(9) of this subchapter must contact the State Board prior to initiating the activity for approval. Other activities for which the State Board may reimburse eligible SWCDs and subcontractors include the purchasing of pesticides by the eligible SWCD for use by the SWCD or a subcontractor during the course of carrying out an O&M activity, the purchasing of easements, the administrative costs of eligible SWCDs associated with O&M activities, and any other O&M-related activities that are approved by the State Board at their discretion.

(e) Non-state funded matching requirement. All O&M reimbursement requests will be paid by the State Board at 90-percent of the total reimbursement request amount. Ten (10) percent of the total reimbursement request amount must be paid through funds not originating from state appropriations. Reimbursement requests for O&M activities may be paid by the State Board up to 100-percent if the flood control dam on which the activities were performed is a part of a watershed project that did not include an O&M agreement with at least one sponsor empowered by the State of Texas to levy taxes on June 19, 2009.

(f) In-kind match contributions. All or a portion of the non-state funded matching requirement may be satisfied through "in-kind" contributions. In-kind contributions must be reported to the State Board on a reimbursement request form at the time the form is submitted to the State Board. In-kind match performed prior to the start of the current biennium is not eligible for use as non-state funded match. In-kind match reported in excess of the required amount for a single reimbursement request may be recorded by the State Board for use by eligible SWCDs on future reimbursement requests within the current biennium. In-kind match may not be carried forward into a new biennium. All aspects of reimbursement requests, including the legitimacy of reported in-kind match, are subject to review and approval by the State Board. In-kind match will be reported at rates approved by the State Board.

(g) Standardized rates for in-kind contributions of O&M activities. A standardized set of rates for certain O&M activities will be adopted by the State Board for use in determining the value of in-kind contributions. Standardized rates adopted by the State Board will be made available to eligible SWCDs upon notification of allocation.

(h) Administrative costs of eligible SWCDs. Eligible SWCDs may request a payment for compensation of their administrative costs in an amount not to exceed five (5) percent of the reimbursed amount. Payments for administrative costs must be reported on a reimbursement request at the time of its submission to the State Board.

(i) Utilizing O&M grant funds for structural repair on flood control dams. The State Board, at their discretion, may consider approving the use of O&M funds for structural repair. All requests to use O&M grant funds for structural repair must specify the type of structural repair intended to be performed and must be submitted in writing to the State Board. All requests to use O&M grant funds for structural repair are subject to review and approval by the State Board. Copies of quotations and bid documents must be provided to the State Board upon request. If concurrence from the NRCS and/or TCEQ must be obtained for the specific repair activity, such concurrence must be obtained and provided in writing to the State Board prior to submitting the request for the use of O&M grant funds for structural repair.

§529.4.Applicability.

(a) Allocations of O&M grant funding will be made only to eligible SWCDs.

(b) Allocations transferred to other sponsors. In cases where the eligible SWCD desires for the State Board to contract directly with another sponsor listed on the O&M agreement for work on flood control dams within the same watershed project, the eligible SWCD must submit a written request to the State Board. Any written agreements providing allowance for one SWCD to perform O&M activities within the boundaries of another SWCD must be submitted to the State Board with the written request. All requests to make allocations to non-SWCD sponsors are subject to review and approval by the State Board. Upon approval, the State Board will notify the eligible SWCD and the other sponsor of the allocation transfer.

§529.5.Allocation of Funds.

(a) Allocation criteria. When available, the most recent statewide survey of O&M needs and cost-estimates performed by the NRCS may be used by the State Board as a basis for making allocations to eligible SWCDs. The State Board may solicit allocation requests directly from eligible SWCDs.

(b) Prioritization of O&M activities. Eligible SWCDs and other sponsors are responsible for prioritizing the scheduling and performance of O&M activities within the scope of a watershed project.

(c) Notification. Notification of allocations will be provided to eligible SWCDs in writing by the State Board.

(d) Reallocation and efficiency. The State Board may adjust allocations within a fiscal year as eligible SWCD needs and the availability funds change in order to achieve the most efficient use of O&M grant funds. Changes in allocation amounts will be made through consultation with any eligible SWCDs whose allocation amount is affected because of the change, and notification of changes will be provided to affected SWCDs in writing.

(e) Effective dates of allocations. Allocations are approved by the State Board for an effective period of time within the fiscal year for which the funds were appropriated. The effective period for an allocation is determined by the State Board and is provided to eligible SWCDs in writing upon notification.

(f) Contracting. When necessary, the State Board may contract with an eligible SWCD for the performance of O&M activities.

(g) Emergency allocations. The State Board may allocate additional funds to any eligible SWCD for a specific O&M activity or activities in the event that immediate action is necessary to protect human health and safety.

§529.6.Solicitation of Bids by Eligible SWCDs.

Solicitation of bids will be required for purchases more than $50,000 in accordance with provisions of §271.024 of the Local Government Code.

§529.7.Reimbursements and Reporting Non-State Funded Match.

(a) Reimbursement requests. Reimbursement requests for O&M activities are subject to approval by the State Board and must be submitted on forms provided by the State Board.

(b) O&M agreements required.

(1) An O&M agreement must be filed with the State Board at all times for reimbursement of O&M activities. If any amendment is made to an O&M agreement on file with the State Board, the amended O&M agreement must be submitted to the State Board prior to receiving reimbursement of a request for O&M activities performed under the amended agreement. Failure to submit amended O&M agreements may result in reimbursement requests not being approved by the State Board.

(2) If any sponsor to an O&M agreement determines that the agreement has expired or is otherwise legally invalid so that participation in this program is prohibited or not feasible, then the participating sponsors shall immediately notify the State Board. The participating sponsors shall submit a new O&M agreement within six months of notification to the State Board.

(c) Payment. Upon satisfactory receipt of a reimbursement request, signature of certification, and other required documentation, the State Board shall cause payment to be issued. Payment for a specific O&M activity may not be made until the activity is completed in its entirety for the flood control dam. All needed O&M activities do not need to be completed prior to reimbursement for a single O&M activity on a flood control dam.

(d) In-kind contributions. In-kind contributions intended to satisfy a non-state funded match requirement must be reported on the reimbursement request form at rates approved by the State Board.

(e) Reimbursement only. Payment will be made on a reimbursement basis only. State money may not be provided in advance.

(f) Purchasing easements. Reimbursement of the purchasing of easements for the purposes of performing O&M activities may be approved by the State Board at their discretion. All requests to use O&M grant funds for the purchasing of easements must be approved by the State Board prior to the purchase.

(g) Certification. Reimbursement requests must be approved by an official act of the SWCD and be certified with the signature of the SWCD chairman. Certification of a reimbursement request means the O&M activities listed on the request have been performed to the satisfaction of the SWCD and represents authorization for the State Board to consider causing payment to the contractor identified on the reimbursement request. An eligible SWCD may conduct a vote during an official SWCD meeting to designate a different director or directors of the SWCD other than the chairman to certify by signature on behalf of the SWCD outside of an official SWCD meeting. Designation of an alternate SWCD director or directors for purposes of certifying a reimbursement request must be noted in the official minutes of the SWCD meeting. If the reimbursement request includes O&M activities for which the State Board has adopted a technical standard, an employee of the State Board or the NRCS must certify by signature on the reimbursement request that the O&M activity was performed in accordance with the applicable technical standard prior to the reimbursement request being submitted to the State Board.

§529.8.Technical Standards for O&M Activities.

Technical standards may be adopted by the State Board for certain O&M activities. Technical standards adopted by the State Board will be made available to eligible SWCDs upon notification of allocation.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 20, 2009.

TRD-200902958

Mel Davis

Special Projects Coordinator

Texas State Soil and Water Conservation Board

Earliest possible date of adoption: August 30, 2009

For further information, please call: (254) 773-2250 x252