Part 1.
TEXAS DEPARTMENT OF TRANSPORTATION
Chapter 1.
MANAGEMENT
The Texas Department of Transportation (department) adopts amendments
to §1.1 and §1.2, concerning organization and responsibilities and §§1.3-1.5,
concerning public meetings and hearings. Sections 1.1-1.5 are adopted without
changes to the proposed text as published in the October 10, 2003, issue of
the
Texas Register
(28 TexReg 8851) and will
not be republished.
EXPLANATION OF ADOPTED AMENDMENTS
Senate Bill 409, 78th Legislature, Regular Session, 2003, increased the
number of persons serving on the Texas Transportation Commission (commission)
from three to five. In addition, it made changes in terminology, in the
role of the chair, and in the powers of the commission. Other statutes enacted
by the 77th and 78th Legislatures increased or altered commission authority
in various areas, including Senate Bills 4 and 342, 77th Legislature, Regular
Session, 2001, and House Bills 2376, 3184, and 3588, 78th Legislature, Regular
Session, 2003.
Throughout the rules, amendments reflect terminology changes made by Senate
Bill 409. The official title of the commissioner of transportation has been
changed to the chair of the commission, while the official title of commission
members has been changed to commissioners. Additional minor amendments are
made to improve readability and to correct citations and cross-references.
Section 1.1(a) is amended to reflect an increase in the number of commissioners
from three to five as enacted in Senate Bill 409.
Section 1.1(b)(1)(I) is amended to reflect the full incorporation of the
Texas Turnpike Authority into the department under Senate Bill 342, and House
Bills 3184 and 3588.
Section 1.1(b)(1)(K) is amended to reflect the elimination in House Bill
3184 of the requirement that the commission approve certain bonds issued by
local governments.
Section 1.1(b)(1)(V) is added to reflect the provisions of House Bill
3588 which gave the commission increased responsibility for rail transportation.
Section 1.1(b)(1)(W) is added to reflect the provisions of Senate Bill
4, which gave the commission responsibility for administering the Texas Mobility
Fund.
Section 1.1(b)(1)(X) is added to reflect the provisions of House Bill
3588, which provided for the designation and establishment of the Trans-Texas
Corridor.
Section 1.1(b)(1)(Y) is added to reflect the provisions of House Bill
3588, which provided for commission approval of the creation of Regional Mobility
Authorities.
Section 1.1(b)(1)(Z) is added to reflect the provisions of Senate Bill
409, which authorized the department to make legislative recommendations concerning
the operation of the department.
Section 1.1(c) is amended to reflect the provisions of House Bill
2376, which repealed the requirement that commissioners post bonds.
Section 1.1(d)(1) is amended to reflect the provisions of Senate Bill 409,
which clarified and expanded the duties of the chair to include determining
the order of business at meetings, creating subcommittees, appointing an acting
chair, making legislative recommendations on behalf of the commission, and
overseeing the preparation of commission agendas. In addition, §1.1(d)(1)(J)
is amended to reflect increased commission involvement in other modes of transportation,
including increased involvement with rail and with ports under House Bill 3588.
Section 1.1(d)(3) is amended to reflect the full incorporation of the Texas
Turnpike Authority into the department under Senate Bill 342, and House Bills
3184 and 3588.
Section 1.2(a)(2) is amended to reflect the incorporation of formerly exempt
positions into the state employee classification system.
Section 1.2(a)(3)(A) is amended to reflect the provisions of House Bill
2376, which repealed the requirement that the executive director post a bond.
Section 1.2(a)(3)(E) is amended to reflect the provisions of Senate Bill
409, which authorized the chair of the commission to oversee preparation of
commission agendas.
Section 1.2(e) is amended and Section 1.2(f) is added to identify and reference
the Motor Vehicle Board and the Automobile Theft Prevention Authority, which
are independent boards that operate with the assistance of department staff.
The operation of these boards is governed by their own statutes and rules.
Section 1.3(b) is amended to reflect the provisions of Senate Bill 409,
which authorized the chair of the commission to appoint an acting chair, to
rule on motions and points of order, and to determine the order of business
at commission meetings.
Section 1.3(d) is amended to reflect the provisions of Senate Bill 409,
which authorized the chair of the commission to create subcommittees, appoint
members of subcommittees, and receive the reports of subcommittees. In addition,
this subsection is amended to provide that formal subcommittee meetings will
follow the procedures of the Open Meetings Act, Government Code, Chapter 551.
Because a meeting of a three-member subcommittee would be subject to the Open
Meetings Act as a meeting of the commission, this ensures that the same standards
will govern all formal subcommittee meetings whether they are attended by
three commissioners or by a subcommittee quorum of two commissioners. This
provision does not apply to informal meetings of two commissioners, however,
which are not covered by the Open Meetings Act.
Section 1.4(g) is amended to reference the Open Meetings Act, Government
Code, Chapter 551, and to eliminate requirements that are set forth fully
in the Act and thus are unnecessary in the rules.
Section 1.5(a)(6) is amended to reflect the full incorporation of the Texas
Turnpike Authority into the department under Senate Bill 342, and House Bills
3184 and 3588.
Section 1.5(a)(8) is amended to reflect House Bill 3588, which provided
for a public hearing before a state highway is transferred to the jurisdiction
of a Regional Mobility Authority, Regional Tollway Authority, or county operating
under Transportation Code, Chapter 284.
COMMENTS
No comments were received on the proposed amendments.
Subchapter A. ORGANIZATION AND RESPONSIBILITIES
43 TAC §1.1, §1.2
STATUTORY AUTHORITY
The amendments are adopted under Transportation Code, §201.101, which
provides the commission with the authority to establish rules for the conduct
of the work of the department.
CROSS REFERENCE TO STATUTE: Transportation Code, Chapters 55, 91, 201,
227, 284, 361, 362, and 370.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on December 19, 2003.
TRD-200308696
Richard D. Monroe
General Counsel
Texas Department of Transportation
Effective date: January 8, 2004
Proposal publication date: October 10, 2003
For further information, please call: (512) 463-8630
43 TAC §§1.3 - 1.5
STATUTORY AUTHORITY
The amendments are adopted under Transportation Code, §201.101, which
provides the commission with the authority to establish rules for the conduct
of the work of the department.
CROSS REFERENCE TO STATUTE: Transportation Code, Chapters 55, 91, 201,
227, 284, 361, 362, and 370.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on December 19, 2003.
TRD-200308697
Richard D. Monroe
General Counsel
Texas Department of Transportation
Effective date: January 8, 2004
Proposal publication date: October 10, 2003
For further information, please call: (512) 463-8630
Subchapter A. ETHICS REQUIREMENTS FOR FINANCIAL ADVISORS AND SERVICE PROVIDERS
43 TAC §§5.1 - 5.6
The Texas Department of Transportation (department) adopts
new §§5.1-5.6, concerning ethics requirements for financial advisors
and service providers. Sections 5.1-5.6 are adopted without changes to the
proposed text as published in the October 10, 2003, issue of the
Texas Register
(28 TexReg 8859) and will not be republished.
EXPLANATION OF NEW SECTIONS
Senate Bill 1059, 78th Legislature, Regular Session, 2003, added new Chapter
2263 to the Government Code to prescribe ethics and disclosure requirements
for outside financial advisors and service providers. Government Code, §2263.004,
requires the governing body of a state governmental entity to adopt by rule
standards of conduct applicable to certain financial advisors or service providers
who provide financial services to the state governmental entity or advise
the state governmental entity or a member of the governing body of the state
governmental entity in connection with the management or investment of state
funds. New §§5.1-5.6 prescribe standards of conduct and disclosure
requirements for financial advisors and service providers that provide financial
services and advice to the department and the Texas Transportation Commission
(commission).
New §5.1 describes the legal authority and purpose of the subchapter.
New §5.2 defines words and terms used in the subchapter. In accordance
with Government Code, Chapter 2263, §5.2 defines a financial advisor
or service provider as a business entity or a person who is not an employee
of the department who provides services in connection with the management
or investment of state funds, and who either may reasonably be expected to
receive more than $10,000 in compensation from the department during a fiscal
year, or who renders investment or funds management advice to the department
or the commission. Also in accordance with Chapter 2263, §5.2 defines
state funds as funds managed or invested by the commission or the department,
and not by the Comptroller of Public Accounts, including bond proceeds held
in trust outside the state treasury.
New §5.3 prescribes general ethical standards applicable to financial
advisors and service providers. Section 5.3 requires financial advisors and
service providers to comply with standards of conduct and conflict of interest
provisions in Government Code, Chapter 572, and Penal Code, Chapters 36 and
39 that are applicable to a state officer or employee, to comply with other
applicable ethics codes and standards of conduct, including standards promulgated
by professional organizations of which the financial advisor or service provider
is a member, and to comply with the Code of Ethics and Standards of Professional
Conduct of the Association for Investment Management and Research. The general
ethical standards prescribe requirements that are established by a globally
recognized organization of investment professionals, or would be applicable
if a department employee were performing those services, and are intended
to ensure services and advice provided to the commission and the department
are above reproach and motivated by the interests of the commission and the
department, and not the interests of another organization or person.
New §5.4 defines when a conflict of interest exists, and requires
financial advisors and service providers to promptly disclose in writing to
the executive director the existence of a conflict of interest and to include
in that notification plans for curing the conflict and avoiding conflicts
of interest. Section 5.4 also requires financial advisors and service providers
to file annual and revised statements required by Government Code, Chapter
2263, disclosing relationships and pecuniary interests subject to that chapter.
The disclosure requirements are intended to provide the department with a
reasoned basis for determining whether a potential conflict of interest is
serious enough to prohibit the financial advisor or service provider from
providing advice and services to the commission and the department, and to
ensure services and advice provided to the commission and the department are
above reproach and motivated by the interests of the commission and the department,
and not the interests of another organization or person.
New §5.5 prohibits financial advisors and service providers from having
certain financial interests and engaging in certain transactions, unless waived
by the executive director of the department or designee in writing. The prohibitions
in §5.5 are intended to ensure that actions taken by a financial advisor
or service provider are motivated by the interests of the commission and the
department, rather than being influenced by considerations of personal gain
or benefit or commercial or business relationships.
New §5.6 requires the department to notify any financial advisor or
service provider under contract with the department of the requirements of
Subchapter A. Section 5.6 also requires any contract with a financial advisor
or service provider to include a provision requiring compliance with the requirements
of §§5.1-5.6, including the requirement to notify the executive
director of any conflict of interest, and provisions relating to termination
of the contract for failure to comply.
COMMENTS
One comment was received on the proposed new sections.
Comment: The PFM Group commented that the rules look to be well drafted
and similar to rules that PFM has seen adopted by other governmental entities.
However, there was one provision that they wanted to call to the department’s
attention because of the procedural issues it may create for the executive
director or designee. Section 5.5(a) states that financial advisors are precluded
from investing in securities in which they (the advisor) may have a financial
interest. The clause does allow the executive director to waive this prohibition.
The problem that the executive director/designee must consider is that many
potential advisors do provide products such as investment pools or money market
funds that may be attractive investment vehicles for the short-term assets
of TxDOT’s portfolio. In addition, other potential financial advisors
may be broker/dealer firms who could sell direct securities to or buy securities
from TxDOT. Under this provision, these relationships would have to be waived
by the executive director/designee for TxDOT to be allowed to choose these
options. The process and position of the executive director/designee providing
a written waiver may not be of material concern, but an alternative construct
would be the requirement for the advisor to disclose in writing prior to an
engagement or investment transaction, any financial interests they have in
the activity being proposed.
Response: The department believes that the state and the public are better
served by requiring an affirmative review and waiver of interests and transactions
subject to §5.5(a). The required review and waiver will help ensure that
actions taken by a financial advisor or service provider are motivated by
the interests of the commission and the department, rather than being influenced
by considerations of personal gain or benefit. The subsection will remain
unchanged.
STATUTORY AUTHORITY
The new sections are adopted under Transportation Code, §201.101,
which provides the Texas Transportation Commission with the authority to establish
rules for the conduct of the work of the department, and Government Code, §2263.004,
which requires the governing body of a state governmental entity to adopt
by rule standards of conduct applicable to certain financial advisors or service
providers who provide financial services to the state governmental entity
or advise the state governmental entity or a member of the governing body
of the state governmental entity in connection with the management or investment
of state funds.
CROSS REFERENCE TO STATUTE: Government Code, Chapter 2263.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on December 19, 2003.
TRD-200308698
Richard D. Monroe
General Counsel
Texas Department of Transportation
Effective date: January 8, 2004
Proposal publication date: October 10, 2003
For further information, please call: (512) 463-8630
Subchapter B. HIGHWAY IMPROVEMENT CONTRACTS
43 TAC §9.18, §9.21
The Texas Department of Transportation (department) adopts
amendments to §9.18, concerning after contract award of highway improvement
contracts, and new §9.21, concerning purchase of service to provide when
maintenance contracts may be awarded as a purchase of service under Government
Code, Title 10, Subtitle D. Sections 9.18 and 9.21 are adopted without changes
to the proposed text as published in the October 10, 2003, issue of the
EXPLANATION OF ADOPTED AMENDMENTS
Senate Bill 1580, 78th Legislature, Regular Session, 2003, amended Transportation
Code, §223.042 to require a private sector contractor to post a performance
bond for certain projects undertaken for the department and to allow a private
maintenance contractor, on certain contracts, to post a bond annually in an
amount equal to the amount to be paid to the contractor divided by the number
of years of the contract.
House Bill 2092, 78th Legislature, Regular Session, 2003, amended Transportation
Code, §223.042 by stating: "The department may award a contract under
this section as a purchase of service under Subtitle D, Title 10, Government
Code, if the department: (1) estimates that the contract will involve an amount
less than $15,000; and (2) determines that the competitive bidding process
in this chapter is not practical."
Section 9.18 is amended to add alternative bonding requirements to subsection
(a)(1)(A) that describe the required performance and payment bonds. The department
may apply these requirements to routine maintenance contracts that are let
for a certain period of time rather than on a per project basis. The amount
of the performance bond will adequately compensate the department in the case
of a default without unnecessarily burdening a private contractors’
bonding capacity on these large routine maintenance contracts.
New §9.21 provides that maintenance contracts may be awarded as a
purchase of service under the Purchasing Act if the project does not require
detailed specifications, there is a need to expedite the project, or it would
be otherwise impractical to use the letting procedures. The new section will
save the department time on small projects (under $15,000) because the letting
process is more time-consuming than the purchase of service process. Both
procedures utilize competitive bidding.
COMMENTS
No comments were received on the proposed amendments and new section.
STATUTORY AUTHORITY: The amendments and new section are adopted
under Transportation Code, §201.101, which provides the Texas Transportation
Commission with the authority to establish rules for the conduct of the work
of the department, and more specifically, Transportation Code, §223.042,
which requires the department to adopt rules regarding the privatization of
maintenance contracts.
CROSS REFERENCE TO STATUTE: Transportation Code, §223.042.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on December 19, 2003.
TRD-200308699
Richard D. Monroe
General Counsel
Texas Department of Transportation
Effective date: January 8, 2004
Proposal publication date: October 10, 2003
For further information, please call: (512) 463-8630
Subchapter G. SPECIFIC INFORMATION LOGO SIGN PROGRAM
Subchapter B. PUBLIC MEETINGS AND HEARINGS
Chapter 5.
FINANCE
Chapter 9.
CONTRACT MANAGEMENT
Chapter 25.
TRAFFIC OPERATIONS