The Texas Department of Transportation proposes new Chapter 26, Regional Mobility Authorities, which includes §26.1 and §26.2, General Provisions; §§26.11 - 26.16, Creation of a Regional Mobility Authority; §§26.21 - 26.23, Revisions to Regional Mobility Authority--Additions, Withdrawals, and Dissolution; §§26.31 - 26.34, Powers and Administration of a Regional Mobility Authority; §§26.41 - 26.48, Development of a Turnpike Project; §§26.51 - 26.56, Maintenance and Operation of a Turnpike Project; §§26.61 - 26.65, Surplus Revenue; §§26.71 - 26.74, Conversion of Non-Tolled State Highway; §§26.81 - 26.84, Reports, Audits, and Records.

EXPLANATION OF PROPOSED NEW SECTIONS

Senate Bill 342, 77th Legislature, 2001, added §361.003 to the Transportation Code. Section 361.003 provides that the Texas Transportation Commission (commission) may authorize the creation of a regional mobility authority (RMA) for the purposes of constructing, maintaining, and operating a turnpike project in a region of the state. New Chapter 26 prescribes the policies and procedures under which a regional mobility authority may be created and may operate.

Commission philosophy.

Certain principles guided the department in the development of the proposed rules. A primary purpose behind the creation of an RMA is to maximize local control in the development and operation of transportation facilities in a region. The commission believes that the creation of an RMA will allow local officials to exercise more responsibility, thus encouraging local innovation and better responses to the particular needs and desires of the local population.

Tempering this first principle of local control are public safety and accountability. First, the commission feels a responsibility to protect the taxpayer and the state's interests because the legislature charged the commission with the responsibility for approving the creation of an RMA. Second, the commission stresses the fact that an RMA turnpike project will be a part of the state highway system and takes note of the following legislative directives. Transportation Code, §201.103, requires the commission to plan and make policies for the location, construction, and maintenance of a comprehensive system of state highways and public roads. Transportation Code, §203.002, authorizes the commission to lay out, construct, maintain, and operate a modern state highway system. Moreover, since an RMA may require the use of federal highway funds, the commission acknowledges the following statutes. Transportation Code, §221.003, provides that an improvement of the state highway system with federal aid shall be made under the exclusive and direct control of the department. Transportation Code, §222.031, provides that money appropriated by the United States for public road construction in this state may be spent only by and under the supervision of the department.

The commission therefore believes that it has a responsibility to adopt rules that promote: (1) the proper and efficient operation of an RMA; (2) the construction, maintenance, and operation of safe and effective turnpikes; (3) the effective use of revenue that maximizes benefit to the traveling public; and (4) compliance with the spirit and intent of applicable state and federal laws, regulations, and policies.

Section by Section Analysis

SUBCHAPTER A. GENERAL PROVISIONS

Section 26.1. Purpose. This section states the purpose of the chapter, which is to prescribe the policies and procedures under which an RMA may be created and may operate.

Section 26.2. Definitions. This section defines certain words and terms used in the chapter. Some definitions require explanation. The term "executive director" is defined to include the department's executive director or the executive director's designee not below district engineer, division director, or office director. This definition allows the executive director to delegate some duties so that the rules may be efficiently implemented, yet it ensures proper accountability by limiting the delegations to officials of sufficient responsibility. "Fiscal year" is defined as the accounting period of 12 months that begins on September 1 of each year and ends on August 31 of the following calendar year. This period coincides with the state's fiscal year to streamline RMA reporting requirements. The definitions of "surplus revenue" and "turnpike project" are statutory (Transportation Code, §361.001 and §361.003) and are provided for the reader's convenience.

SUBCHAPTER B. CREATION OF A REGIONAL MOBILITY AUTHORITY

Section 26.11. Petition. One or more counties may petition the commission to create an RMA. While the statute is not explicit on this point, the commission believes that the legislature intended counties to initiate the process.

The department has received various questions concerning possible limits on the size and geography of an RMA. To provide maximum flexibility that will enable the commission and local governments to adapt to different circumstances, the commission has chosen not to place limits on the geographic makeup of an RMA. For instance, member counties do not have to be adjacent, the geographic area of RMAs may overlap, and there is no limit on the number of counties in an RMA. Thus, there could be a Bexar County RMA and a separate RMA consisting of several counties in the San Antonio region, including Bexar County.

The petition must include various items. The commission's intent is to make it as easy as possible for counties to create an RMA. The petition must include a resolution from the commissioners court of each county indicating its approval of the creation of the RMA and a description of how the RMA would improve mobility in the region. For the commission to make an informed decision about the creation of the RMA, the commission believes that counties must identify one or more turnpike projects that the RMA would develop. The rule, therefore, requires minimal information on proposed projects. The commission understands that a project may be in the conceptual stage and does not want the counties to expend significant resources on the development of the project at this stage. To this end, the information required on each petition, is intended to be minimal and brief. It must be submitted in a form that will allow the commission to decide if the project merits further development and study by an RMA.

The petition must include an explanation of how each project will be consistent with the relevant policies, strategies, and actions of the Texas Transportation Plan and, if appropriate, with the metropolitan transportation plan developed by the metropolitan planning organization. Under 23 C.F.R. §450.216 and §450.324, in order for a project to receive federal highway funding it must be included in a federally approved Statewide Transportation Improvement Program (STIP) and financially constrained transportation improvement program (TIP). Moreover, regionally significant transportation projects for which Federal Highway Administration (FHWA) or Federal Transit Administration (FTA) approval is required must be included in the STIP and TIP whether the project is funded with federal, state, local, or private funding. Projects included in the STIP must be derived from the Texas Transportation Plan (statewide transportation plan). Similarly, projects included in a metropolitan TIP developed by the metropolitan planning organization must be derived from a metropolitan transportation plan. Projects included in a rural TIP must be consistent with the statewide transportation plan.

The petition must include a brief description of any known environmental, social, economic, or cultural resource issues. These may include, for example, effects on parks, neighborhoods, businesses, historic buildings, bridges, wetlands and other water resources, endangered species, or archeological sites. The petitioner must also identify any known opponents to the project and describe any known controversies. The commission does not wish to require the petitioner to conduct new studies to comply with these requirements. The descriptions need only be brief and need only include "known" information. The original purpose of an RMA is to develop this initial project. Before the department and the petitioners expend significant resources in forming the RMA and developing the project, the commission feels that it must consider these critical issues and be aware of any controversies associated with the project. If significant impacts are known, the commission may not wish to pursue creation of an RMA.

The petitioner must submit a preliminary financing plan for the project that will enable the commission to understand the financial scope of the project. This plan will also give the commission an idea of the potential financial commitment to be required of the department.

To maintain consistency with the department's vision for environmentally sensitive transportation systems and to ensure compliance with state and federal requirements, the petitioner must commit to obtaining all required environmental permits and other environmental approvals.

Section 26.12. Public Hearing. If the department finds that the petition is sufficient, it will conduct one or more public hearings to receive comment on the proposed RMA. The department will hold one or more hearings in one or more of the counties of the petitioner. The petitioner will advertise each hearing in accordance with an outreach plan developed in consultation with the department. The commission believes that this public involvement is necessary for the commission to determine the views of the public at large and is sufficiently flexible to adapt to the particular circumstances of each petition.

Section 26.13. Approval. This section sets out the conditions under which the commission will approve the creation of an RMA. First, since an RMA's success hinges on sufficient public support, the commission will consider both public comments received at the public hearings and the views of the local metropolitan planning organization (MPO). The commission considers the views of the MPO to be especially important because an MPO typically represents many of the local governments in the region. To approve the creation of the RMA, the commission must also find that the creation of the RMA will result in direct benefits to the state, local governments, and the traveling public and will improve the efficiency of the state's transportation systems. In light of the RMA's vital importance to the transportation in the region, the commission wants to ensure that the RMA will benefit all affected parties. Finally, to ensure compliance with federal law, the commission must find that each project comes from a conforming transportation plan and transportation improvement program if the project is located in a nonattainment area.

Section 26.14. Commission Action. If the commission approves the creation of an RMA, it will adopt an order. The order will designate the geographic area in which the RMA may operate, which will be along county lines. Setting RMA boundaries at county lines maximizes the ability of the RMA to address transportation issues within the region while establishing a readily identifiable border. The order will describe each turnpike project to be developed by the RMA and will identify any restrictions the commission deems necessary for the protection of the public safety and the natural environment. Since the projects will be a part of the state highway system, the commission feels it must retain the opportunity to guide the development, maintenance, and operation of the project as it deems necessary. The order will also describe any other limits on the operation of the RMA. Again, since the commission is approving the creation of an important new governmental entity and that entity is developing new segments of the state highway system, the commission wishes to retain the opportunity to regulate the operations of the RMA depending on the circumstances. Finally, the order will establish the size of the RMA's board of directors and designate the political subdivisions that will be represented on the board. The commission wants to ensure that the RMA's board will adequately represent local governments in the region. This issue is more fully covered in the discussion of §26.16.

Section 26.15. Creation. This section provides a mechanism under which the counties will formally create the RMA. Each county must adopt a resolution appointing that county's directors.

Section 26.16. Board of Directors. Subsection (a) provides that the board will administer and operate the RMA.

Subsection (b) provides for county appointees, as required by Transportation Code, §361.003.

Subsection (c) provides that the governor shall appoint one director to serve as the presiding officer, as required by Transportation Code, §361.003.

Subsection (d) provides that the commission may authorize the appointment of additional directors as it deems necessary to ensure fair representation of affected political subdivisions within the geographic area of the RMA. The commission believes for two reasons that it is important for political subdivisions other than counties to be represented on the board. First, Transportation Code, §361.003, provides that the "governing body of a regional mobility authority is a board of directors consisting of representatives of political subdivisions in each county in which a turnpike project is proposed to be located." The statute goes on to describe how counties appoint members. The commission believes that the quoted provision indicates a clear legislative intent to include representatives of political subdivisions on the board, in addition to representatives of the counties. Second, the commission believes that it is critical to the ultimate success of an RMA that other affected political subdivisions participate in its governance.

The affected political subdivisions will appoint members who are subject to commission approval. The commission may authorize the appointment of one or more directors to represent more than one political subdivision and may rotate these appointments to allow for equitable representation. These provisions provide the necessary flexibility for the commission to deal with various circumstances, such as the fair representation of many small entities.

Subsection (e) provides that directors will be appointed to terms of two years. Directors may be reappointed at the discretion of the appointing entity.

Subsection (f) provides that directors serve without compensation, but are entitled to reimbursement for expenses.

Subsection (g) provides that a director may be removed by the appointing entity for any reason.

Subsection (h) provides eligibility requirements for members of the board. In order to promote the public's confidence in the integrity and impartiality of RMAs, certain individuals whose circumstances create either an actual conflict of interest or the appearance of a conflict of interest are ineligible to be board members.

SUBCHAPTER C. REVISIONS TO RMA--ADDITIONS, WITHDRAWALS, DISSOLUTION

Section 26.21. Addition of Counties. This section allows counties, with the consent of the commission, to join an existing RMA. The commission will approve the addition if the RMA agrees and if the commission finds that the addition will benefit the mobility of the region. This section provides flexibility for the growth of an RMA, but the commission desires to reserve the right to ensure that the addition is beneficial to the region.

Section 26.22. Withdrawal of Counties. To provide further flexibility for local governments, this section allows a county to withdraw from an RMA. The commission must consent to the withdrawal and will do so if it finds that the withdrawal will not have an adverse impact on the mobility of the region and if the RMA has no bonded indebtedness. This last provision is necessary to protect the financial viability of an RMA's projects by ensuring that project financing plans involving the county seeking to withdraw from the RMA are not adversely affected. If the RMA has no debt other than bonded indebtedness, the petitioning county must also obtain the approval of the RMA's board. This provision is intended to protect the RMA, its contractors, and its creditors.

Section 26.23. Dissolution of an RMA.

Subsection (a), voluntary dissolution. This subsection allows an RMA to dissolve if approved by the commission. The commission will approve the dissolution if the RMA has discharged or provided for all debts, obligations, and liabilities, including pending lawsuits. Additionally, the RMA projects must be in proper condition. These conditions are necessary to protect the financial viability of projects by ensuring that project financing plans are not adversely affected, the rights of contractors and creditors, the traveling public, and taxpayers.

Subsection (b), involuntary dissolution. To ensure compliance with these rules and all applicable agreements, to provide for accountability to the commission and the public, and to encourage the expeditious development of the RMA's turnpike projects, this subsection allows the commission to dissolve an RMA. Involuntary dissolution may be imposed for substantial noncompliance with the rules or with agreements required by the rules or if the RMA fails to pursue development of a project expeditiously. The commission will not require dissolution unless the commission or the RMA has discharged or provided for all debts, obligations, and liabilities, including pending lawsuits, in order to ensure that project financing plans are not adversely affected. The subsection allows the RMA an opportunity to speak to the commission before the commission takes action.

SUBCHAPTER D. POWERS AND ADMINISTRATION OF AN RMA

Section 26.31. General Powers. This section provides that an RMA has the same powers as the Texas Turnpike Authority division (TTA) of the department under Transportation Code, Chapter 361, to the extent authorized by law and subject to any restrictions or limitations provided by law, rule, or commission order. The commission construes Transportation Code, §361.003, as implicitly granting RMAs the same powers as the TTA and finds that such a grant is necessary for an RMA to accomplish the goals established by the legislature.

Section 26.32. Administrative Expenses. This section requires the political subdivisions represented on the board to be responsible for the RMA's administrative expenses. The commission does not consider it appropriate that the taxpayers of the state pay for an RMA's administrative expenses.

Section 26.33. Conflict of Interest. In order to promote public confidence in the integrity and impartiality of RMA's, subsection (a) establishes standards of conduct for RMA directors and employees, and subsection (b) sets forth eligibility requirements for RMA directors and chief administrative officers. The requirements in subsection (a) include the same standards of conduct that Government Code, §572.051 imposes on state officers and employees, as well as the common law prohibition against conflicts of interest in contracting. Because the responsibilities of RMA officers are similar to the responsibilities of the commission, the same eligibility requirements for members on the commission, provided for in Transportation Code, §201.051, are included in subsection (b).

Section 26.34. Donations. To further ensure proper accountability and compliance with law, this section authorizes an RMA to accept donations only if the donation will further the performance of its duties as authorized by the commission, and is used for specific purposes legally supported and authorized by the donor.

SUBCHAPTER E. DEVELOPMENT OF A TURNPIKE PROJECT

Section 26.41. Social and Environmental Impact. Subsection (a) requires an RMA to develop a project in accordance with Transportation Code, §361.103, and in a manner that is consistent with the spirit and intent of the National Environmental Policy Act (NEPA) by conducting a study of the social and environmental impact of the project. Section 361.103 sets out the minimum statutory requirements for the environmental review of a turnpike project. In accordance with the department's vision for environmentally sensitive transportation projects, the commission feels that a study must be conducted consistently with the spirit and intent of NEPA.

Subsection (b). This subsection provides that if federal funds are requested or if federal approval or another federal action is required with respect to a project, the environmental review must also be conducted in compliance with Federal Highway Administration regulations.

Subsection (c). To ensure compliance with Transportation Code, §361.103(c), this subsection requires commission approval of an RMA's environmental review before a construction contract is advertised for bids.

Section 26.42. Public Involvement. This section requires an RMA to comply with the department's public involvement rules and with Transportation Code, §361.103. This provision will ensure that the RMA's public involvement process will always comply with minimum state and federal requirements and will sufficiently include the public in the decision-making process.

Section 26.43. Project Approval. Transportation Code, §361.101, requires commission approval of the location of a turnpike project. Transportation Code, §362.051, requires a governmental entity, such as an RMA, to obtain the commission's approval of a toll project that is to be a part of the state highway system. Section 26.43 is intended to ensure that an RMA complies with these two statutory requirements.

The section requires the RMA to submit an updated financing plan and a report identifying relocations or reconstruction to the state highway system anticipated in connection with the proposed project. This information is needed by the commission to evaluate possible effects on the state highway system.

In making its decision, the commission will consider whether the project will be effectively integrated into the state highway system and whether the department is able to construct any connecting roads necessary for the project to generate sufficient revenue to pay the debt incurred for its construction. Transportation Code, §362.051, requires that the commission consider these items.

Section 26.44. Design and Construction. This section establishes the requirements for the design and construction of projects undertaken by an RMA. As previously described, the legislature has delegated certain powers and responsibilities relating to the state highway system to the commission. Since projects developed by an RMA are a part of the state highway system, the commission must maintain a degree of oversight of these projects.

Subsection (a). To clarify responsibility for RMA projects, this subsection states that the RMA is fully responsible for each project it undertakes.

Subsection (b). This subsection describes the design criteria required for project development. Since these projects are an integral part of the state highway system and to ensure consistent design of all facilities on the state system, these projects must be developed in compliance with the department's established manuals, which provide the appropriate design criteria for various facility types. Recognizing that there may be situations when the use of alternative nationally accepted criteria would be beneficial to the project, provisions are included to identify when the department may approve the use of alternative criteria. This approval would only be granted when the department finds that the use of alternative criteria would adequately protect the safety of the traveling public and the integrity of the transportation system.

In recognition that it is not always possible to comply with design criteria, provisions are also included so an RMA may request approval to deviate from established criteria for a particular design element on a case-by-case basis. Based on the engineering justification for the exception, the executive director may approve an exception after determining that the particular criteria could not reasonably be met because of physical or environmental factors and that the proposed design is the best engineering solution. This process is similar to that used by the department and other states to minimize the risk of tort liability and to ensure that deviations from design criteria are well documented and are not made arbitrarily.

Subsection (c). This subsection describes the project development requirements for RMA projects. Since these projects are an integral part of the state highway system and may revert to the department in the future, it is necessary and prudent to ensure that the facility will serve its intended function to carry traffic for as long as possible. Toward that end, the RMA will be required to adhere to the department's policy regarding the provision of frontage roads so that excessive development along frontage roads will not degrade the operation of the RMA facility.

Pursuant to Title 23, United States Code, §111, the state may not add any points of access to or exit from an interstate highway without the prior approval of the Federal Highway Administration (FHWA). Therefore, §26.44(c)(2) requires that the RMA submit all materials required to seek FHWA approval of any proposal to revise access to an interstate highway.

Subsection (d). This subsection describes the requirement for the RMA to submit preliminary designs to the department for review and approval. As part of the department's oversight of projects developed by an RMA, the department must ensure that any state highway improvement project is developed in accordance with all applicable federal and state laws and regulations and that the appropriate design criteria are being properly utilized. Determining potential areas of non-compliance as early in project development as possible will benefit all parties by minimizing unnecessary costs and delays through early agreements on required design changes. If these issues are not discovered until all detailed design work has been completed, then changes will delay the project. The 30% phase of design development is commonly regarded as the point at which schematic design is complete. At this point the basic geometry of the facility will have been determined and the items listed for submission to the department should be available for review.

The Design Summary Report form is used by the department at the beginning of project development to facilitate agreement among all parties on the design standards and some basic values to be used for the design of the project. Submission of this form will enable the department to verify that the basic design parameters used for the project are appropriate. Submission of current and forecasted average daily traffic volumes is needed for the department to adequately review the proposed design and traffic control plan for the project. Traffic loadings must be submitted for the review of the proposed pavement design. Horizontal layout information is needed for the department to verify that the curvature and pavement cross slope provided are appropriate for the design speed and class of highway. Typical sections are required to enable department review of the facility's proposed cross section for the entire right of way width. Profile grade information is required for the department to ensure that adequate sight distance is provided on the facility.

Structural (bridge, retaining, and sound wall) layouts are required for the department to ensure the provision of adequate foundations, crashworthy railing, and necessary horizontal and vertical clearances to adjacent features. Structural capacity information is also required to ensure that the proposed structures will safely handle the loadings that can be anticipated on the state highway system. Drainage area maps and hydraulic and hydrologic studies will enable department review of drainage throughout the project.

An RMA must explain its anticipated methods of handling traffic during construction to guarantee the safety of the traveling public through provision of appropriate traffic-carrying capacity and detours. Submission of proposed erosion-control measures will ensure that measures necessary to protect the water quality in the area are being incorporated early in project design. A discussion of how U. S. Army Corps of Engineers and water quality certification requirements are to be met will ensure that these important legal requirements are addressed early in project design and will provide an opportunity for the RMA to benefit from the department's experience in this area. Submission of a signing schematic for freeway projects will ensure that the project design is compatible with the appropriate placement of guide signs that comply with the Texas Manual on Uniform Traffic Control Devices.

Subsection (e). This subsection describes the requirements pertaining to construction specifications applicable to an RMA project. To provide a quality project and to ensure compatibility with the rest of the state highway system, RMAs are required to use the department's specifications on projects. These specifications have been proven over time to provide high quality and durable facilities. In addition, highway construction contractors across the state are familiar with department specifications; therefore, the use of these specifications should result in economic savings to the RMA. However, if the RMA asks to use an alternative specification for a particular item of work, the executive director may approve the request if the proposed specification ensures the quality and durability of the finished product while protecting the safety of the traveling public.

Subsection (f). This subsection describes the requirements for department approval of the final plans and contract administration procedures. As part of the department's oversight of projects developed by an RMA, the department must ensure that any state highway improvement project is developed in accordance with all applicable federal and state laws and regulations and that the appropriate design criteria are being properly utilized. The RMA is required to submit the final plans, specifications, and engineer's estimate (PS&E) so the department can verify that the PS&E comply with applicable state and federal regulations and that the appropriate design criteria have been met. The RMA is required to summarize any design changes made since approval of the preliminary design so the department can readily determine that the alterations comply with the established design criteria for the project. The department will also review the bidding proposal and contract administration procedures submitted by the RMA to ensure compliance with applicable state and federal requirements. In addition, the department will consider whether the PS&E have addressed all environmental permits, issues, commitments, or mitigation required by the approved environmental document.

Subsection (g). To ensure that an RMA does not rely on insufficient design criteria or inadequate traffic control, this subsection requires the PS&E to be approved by the department before the project is advertised for bids. If state or federal funds are used on the project, the department will ensure that RMA procedures related to bidder qualification, bidding, award, and execution of a contract are in compliance with state requirements.

Subsection (h). This subsection describes the parties' responsibilities for construction inspection and oversight. Unless otherwise agreed by the department, the RMA will be responsible for overseeing the construction of the project and ensuring that construction is performed in compliance with state and federal requirements.

Subsection (i). This subsection ensures that contract revisions will comply with applicable design criteria and requires the RMA to submit contract revisions to the department for approval before beginning the work. This will protect the safety of the traveling public by ensuring that a non-conforming design change is not implemented as a contract revision.

Subsection (j). This subsection requires the RMA to provide the department with a final set of as-built plans, signed, sealed, and dated by a professional engineer certifying that the project was constructed in accordance with the plans. This submission is necessary for the department to have a final record of as-built plans for all projects on the state highway system. These plans are often needed by the department for future reference for a variety of purposes.

Subsection (k). This subsection describes the requirements for the RMA to provide the department with copies of available electronic documents developed by the RMA. Since these facilities may revert to the department in the future, the department needs this information for possible future use in plan production work on facilities constructed by an RMA.

Subsection (l). This subsection affirms the responsibility of the RMA to comply with all applicable laws with regard to its projects.

Subsection (m). To protect the safety of the traveling public, this subsection requires the RMA to obtain express written agreement from the department before performing any work within the limits of state-owned right of way.

Section 26.45. Contracts. This section provides that all contracts for the development, maintenance, or operation of a turnpike project must be awarded in compliance with applicable law and that an RMA must adopt written procedures governing its procurement of goods and services. These provisions are intended to ensure that the RMA engages in good contracting practices.

Section 26.46. Funding. To assist an RMA in the development of worthwhile transportation projects, this section provides that an RMA may seek a loan or grant of funds from the department. This section also provides that the provisions of this chapter apply in the event of a conflict with a provision of rules governing toll financing. The proposed toll financing rules (§§27.50 - 27.58 of this title) govern the loan or grant of funds for toll facilities not under the jurisdiction of the department. The requirements of the two rules vary to some degree, primarily because an RMA project is part of the state highway system.

Section 26.47. Pooling. This section provides that before pooling projects, the RMA must seek commission approval in the same way that a TTA project is approved.

Section 26.48. Project Development Agreement. This section requires the RMA and the department to enter into an agreement governing the development of a turnpike project. The agreement is intended to help ensure proper communication between the two parties, to encourage compliance with the commission's rules, and to provide a mechanism for the parties to address issues not resolved by the rules.

SUBCHAPTER F. MAINTENANCE AND OPERATION OF A TURNPIKE PROJECT

Section 26.51. General. To ensure compliance with law and operation of a safe facility, this section requires an RMA to maintain and operate a turnpike project in accordance with all applicable federal and state requirements. An RMA must perform all maintenance and repair required to ensure that the project is kept in its designed and constructed or updated condition and that the project functions as intended.

Section 26.52. Maintenance. This section requires an RMA to meet the most current "Texas Maintenance Assessment Program" minimum rating requirements for interstate highways as established by the commission in its implementation of Governmental Accounting Standards Board Statement No. 34. A proper level of maintenance is required to safeguard the traveling public and to ensure protection of the public investment in infrastructure. The standard set by this section will achieve that result with minimum intrusion on the RMA. The section allows an RMA to request an alternative standard. The department will approve an alternative if it is sufficient to protect the safety of the traveling public and to protect the integrity of the transportation system.

Section 26.53. Operation. To ensure compliance with legal requirements, this section requires an RMA to comply with all laws and rules applicable to a state highway. It also identifies the legal requirements for various aspects of a turnpike's operations. In addition, the section requires an RMA to coordinate any development of intelligent transportation systems with the department to ensure compliance with state and federal law and to ensure efficient operations. Finally, the section requires RMAs to adhere to department policy regarding interoperable electronic toll collection (ETC) systems so the public will realize the full benefits of interoperable ETC systems. By facilitating systems that are compatible across metropolitan areas, the rule will ensure that these benefits extend to vehicles traveling outside their home areas and include metropolitan areas they are visiting. Some of the benefits of ETC are: eliminating the need to stop and pay a cash toll; enhancing mobility; reducing congestion and delays; reducing vehicle and RMA operational costs; increasing fuel mileage and reducing vehicle emissions; promoting use of toll roads and increasing financial viability of future toll projects; allowing electronic payment at various public and private functions, such as airport parking, private parking lots, and drive-throughs; facilitating implementation of automatic vehicle access control systems; and providing a technology base for certain commercial fleet services.

Section 26.54. Project Operating Agreement. To help ensure that a project is maintained and operated in compliance with the rules and in a safe and efficient manner, this section requires the RMA and the department to enter into a project operating agreement. If the RMA agrees to pay all department costs, the department may maintain or operate an RMA project. Depending on the location and nature of the facility, in some circumstances this option may be practical and efficient for both entities and for the taxpayers.

Section 26.55. Project Constructed by the Department. This section provides that an RMA may ask the department to transfer to the RMA a segment of tolled state highway that was constructed by the department. To provide maximum flexibility allowing the commission to respond appropriately to the needs of a region, the commission wants the ability to transfer a TTA project to an RMA. A transfer could reduce the burden on the department of having to maintain and operate the highway while giving local governments more control over highway facilities within their jurisdictions.

The commission may approve a transfer under this section if the transfer is allowed by the trust agreement or indenture for the project, if property and contract rights in the project and bonds issued by the commission for the project would not be affected unfavorably, and if the RMA is capable of maintaining and operating the project in a safe and efficient manner. These criteria are necessary to ensure the financial viability of TTA and RMA projects, to protect the rights of other parties, and to protect the safety of the traveling public.

Section 26.56. Department Assuming Jurisdiction of RMA Project. Transportation Code, §361.238, provides that a turnpike project becomes a non-tolled highway under the jurisdiction of the department when all debt issued for the project has been paid or otherwise provided for. If this occurs, §361.238 authorizes the commission to continue to charge a toll sufficient to pay the costs of maintaining the facility. This section of the rules restates these statutory provisions and further requires an RMA to ensure that, prior to the department assuming jurisdiction of a project, the project is in a condition that complies with §26.52(a). This requirement is intended to protect the department from being required to spend significant state funds to rehabilitate a poorly maintained facility.

SUBCHAPTER G. SURPLUS REVENUE

Section 26.61. General. This section requires an RMA to use surplus revenue from turnpike projects to reduce tolls, to spend it on other transportation projects in the geographic area of the RMA, or to deposit it in the Texas Mobility Fund. These options are required by Transportation Code, §361.003. Expenditures on other transportation projects are limited to projects within the geographic region to ensure that the region benefits from the success of its operations. The RMA must determine whether it has surplus revenue each fiscal year to ensure proper accountability to the public and the commission.

Section 26.62. Finance or Construction. As provided by Transportation Code, §361.003, this section authorizes an RMA to spend surplus revenue on other transportation projects by assisting in the financing of a transportation project of a governmental entity or by constructing a transportation project and transferring the completed project to a governmental entity. The construction and transfer of a transportation project is only permitted if the construction complied with all laws applicable to the governmental entity. The governmental entity must authorize construction and must assume all liabilities and all responsibility for subsequent maintenance and operation of the project. These provisions provide RMAs with flexibility in the use of surplus revenue while involving local governments in the decision to assume responsibility for a transportation project.

Section 26.63. Notification of Financial Assistance. This section requires an RMA to provide the commission with at least 45 days written notice prior to providing financial assistance under §26.62. In the interest of local control, the commission felt that an RMA should have the ability to provide financial assistance to any eligible transportation project. Since in certain circumstances the RMA's decision may have significant impact on the region's transportation and on the department's plans for meeting the region's future transportation needs, the commission desires to retain the ability to comment on the RMA's proposed action.

Section 26.64. Commission Approval. This section establishes the conditions under which the commission will approve an RMA's construction of a transportation project using surplus revenue. The conditions will ensure that a new project conforms to the existing and planned transportation infrastructure. The conditions include requirements that the project comes from a conforming transportation plan and transportation improvement program, when required by federal law, and that the project is consistent with the Texas Transportation Plan, the metropolitan transportation plan, and the Statewide Transportation Improvement Program. Under 23 C.F.R. §450.216 and §450.324, in order for a project to receive federal highway funding it must be included in a federally approved Statewide Transportation Improvement Program (STIP) and financially constrained transportation improvement program (TIP). Moreover, regionally significant transportation projects for which Federal Highway Administration (FHWA) or Federal Transit Administration (FTA) approval is required must be included in the STIP and TIP whether the project is funded with federal, state, local, or private funding. Projects included in the STIP must be derived from the Texas Transportation Plan (statewide transportation plan). Similarly, projects included in a metropolitan TIP developed by the metropolitan planning organization must be derived from a metropolitan transportation plan. Projects included in a rural TIP must be consistent with the statewide transportation plan. Projects in nonattainment areas included in the STIP and TIP must conform to the State Implementation Plan. In addition, this section sets forth the factors the commission will consider in analyzing the effect of the proposed project on regional mobility. These factors include traffic congestion, environmental compliance, benefits to local governments, and the effect on the availability of transportation funding.

Section 26.65. Eligible Transportation Projects. As required by Transportation Code, §361.003, this section lists the types of transportation projects that are eligible for funding or construction under §26.62. To maximize local control, the commission wants the list to be as comprehensive as possible and to cover all modes of transportation, with two exceptions. The commission does not believe that turnpike revenue should be used for maintenance or for the construction of local roads or rural minor collectors. The commission believes that these items should remain the responsibility of the applicable local government and wants surplus revenue to be used for projects that have a more substantial impact on regional mobility.

SUBCHAPTER H. CONVERSION OF NON-TOLLED STATE HIGHWAY

Section 26.71. Request. As provided by Transportation Code, §361.003, this section authorizes an RMA to request conversion of a segment of the non-tolled state highway system to a turnpike project and transfer of that segment to the RMA.

Section 26.72. Public Involvement. This section provides that if the commission determines that a proposed transfer is an integral part of the region's overall plan to improve mobility in the region, under Transportation Code, §361.003, the department will hold one or more public hearings and publish a notice in the Texas Register for the purpose of seeking comments. The commission believes that public input is particularly crucial before a highway is converted into a toll facility.

Section 26.73. Approval. This section sets out the circumstances under which the commission may approve a conversion. First, each affected city and county must support the conversion, and there must be significant public support for the conversion. The commission feels that local support is crucial in the conversion of a non-toll facility into a turnpike. Second, the RMA must agree to assume all liability and responsibility for the safe and effective maintenance and operation of the project. This protects both the traveling public and taxpayers. Third, the RMA must assume all liability and responsibility for compliance with federal laws, regulations, and policies applicable to the project, as required by Transportation Code, §361.003. Finally, the commission must determine that the conversion is in the public interest. This enables the commission to consider any relevant issue relating to the conversion.

Section 26.74. Use of Surplus Revenue. This section limits the expenditure of surplus revenue generated from a converted project. The department will determine the asset value of the highway to be converted. The RMA may expend surplus revenue only on improvements to the state highway system until total expenditures have equaled the asset value. This requirement may be waived by the commission on a project-by-project basis if the commission determines that the project will provide a substantial benefit to the traveling public.

The commission has limited the expenditures of surplus revenue from a converted highway because federal and state funds have been used to construct, maintain, and operate the highway. Since taxpayers throughout the state have paid for the converted highway, the commission feels that the state highway system should benefit from revenues that are generated from the facility.

SUBCHAPTER I. REPORTS, AUDITS, AND RECORDS

Sections 26.81 - 26.84. Written Reports, Annual Audits, Other Reports, Operating Records. The commission anticipates that the primary source of funding for RMA projects will be bond proceeds. In order to issue bonds for a project, an RMA is required to comply with various terms and conditions in the trust agreement or indenture securing the bonds or in other financing documents. These terms and conditions include provisions relating to the submission of financial and operating reports and information, including annual operating and capital budgets and detailed financial information and notices of material events relating to the bonds, as well as provisions relating to project accounting and audits. An RMA will be required to report detailed financial information and audits and to disclose other information to institutions as required by federal laws and regulations, and which investors will rely upon to protect their investment in a project. The accounting and audit provisions generally require an issuer to maintain its books and records in accordance with generally accepted accounting principles (GAAP) and to have an audit of those books and records performed annually in accordance with generally accepted auditing standards.

In order to protect the taxpayer's and the state's interests, to ensure applicable laws and regulations are followed, and to facilitate an RMA's development and operation of projects, §§26.81 - 26.84 prescribe requirements an RMA must follow in submitting financial and operating reports to the department, in maintaining its books and records, and in auditing those books and records, and prescribe requirements relating to the retention of audit work papers and reports and other operating and financial records and documents. Those requirements are the same an RMA will be required to follow as a condition of issuing bonds.

FISCAL NOTE

James Bass, Director, Finance Division, has determined that for each of the first five years the new sections are in effect, there will be fiscal implications for state and local governments as a result of enforcing or administering the new sections. The state will experience some increase in administrative costs as a result of providing the oversight of RMA operations required by the rules. This cost cannot be determined because it will depend on the activities of the RMAs. The state may also experience a fiscal savings depending on the success of RMAs in developing projects that would have been developed by the department and in reducing department maintenance expenditures by reducing traffic on department facilities. Local governments that opt to create and participate in RMAs will experience an increase in costs that will depend on the activities of the RMA. This increased cost will be offset by the improved mobility and decreased state highway local participation requirements for department projects. There are no anticipated economic costs for persons required to comply with the sections as proposed.

Phillip E. Russell, P.E., Director, Texas Turnpike Authority Division, has certified that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the new sections.

PUBLIC BENEFIT

Mr. Russell has also determined that for each year of the first five years the sections are in effect, the public benefit anticipated as a result of enforcing or administering the new sections will be the proper administration of regional mobility authorities and the expeditious development of needed transportation facilities. There will be no adverse economic effect on small businesses.

PUBLIC HEARING

Pursuant to the Administrative Procedure Act, Government Code, Chapter 2001, the Texas Department of Transportation will conduct a public hearing to receive comments concerning the proposed new sections. The public hearing will be held at 1 p.m. on February 27, 2002, in the first floor hearing room of the Dewitt C. Greer State Highway Building, 125 East 11th Street, Austin, Texas and will be conducted in accordance with the procedures specified in 43 TAC §1.5. Those desiring to make comments or presentations may register starting at 12:30 p.m. Any interested persons may appear and offer comments, either orally or in writing; however, questioning of those making presentations will be reserved exclusively to the presiding officer as may be necessary to ensure a complete record. While any person with pertinent comments will be granted an opportunity to present them during the course of the hearing, the presiding officer reserves the right to restrict testimony in terms of time and repetitive content. Organizations, associations, or groups are encouraged to present their commonly held views and identical or similar comments through a representative member when possible. Comments on the proposed text should include appropriate citations to sections, subsections, paragraphs, etc. for proper reference. Any suggestions or requests for alternative language or other revisions to the proposed text should be submitted in written form. Presentations must remain pertinent to the issues being discussed. A person may not assign a portion of his or her time to another speaker. Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services such as interpreters for persons who are deaf or hearing impaired, readers, large print or Braille, are requested to contact Randall Dillard, Director, Public Information Office, 125 East 11th Street, Austin, Texas 78701-2483, (512) 463-8588 at least two working days prior to the hearing so that appropriate services can be provided.

SUBMITTAL OF COMMENTS

Written comments on the proposed new sections may be submitted to Phillip E. Russell, P.E., Director, Texas Turnpike Authority, 125 East 11th Street, Austin, Texas 78701-2483. The deadline for receipt of comments is 5:00 p.m. on March 18, 2002.

Subchapter A. GENERAL PROVISIONS

Subchapter E. FINANCIAL ASSISTANCE FOR TOLL FACILITIES