Subchapter A. MOTOR VEHICLE CERTIFICATES OF TITLE

The Texas Department of Transportation (department) adopts amendments to §17.2, concerning definitions relating to Subchapter A, Motor Vehicle Certificates of Title; the repeal of §17.8, concerning certificates of title for salvage vehicles; the repeal of Subchapter D, §§17.60-17.64, concerning salvage vehicle dealers; and simultaneously adopts new Subchapter D, §§17.60-17.68, concerning nonrepairable and salvage motor vehicles, and new Subchapter E, §§17.70-17.81, concerning salvage vehicle dealers. Sections 17.61-17.63, §17.65, §17.68, §17.71, §17.72, §17.79, and §17.80 are adopted with changes to the proposed text as published in the November 14, 2003, issue of the Texas Register (28 TexReg 10120). Amendments to §17.2, the repeals of §17.8 and §§17.60-17.64, and new §17.60, §17.64, §17.66, §17.67, §17.70, §§17.73-17.78, and §17.81 are adopted without changes to the proposed text and will not be republished.

EXPLANATION OF ADOPTED AMENDMENTS, REPEALS, AND NEW SECTIONS

House Bill 2813, 77th Legislature, 2001, recodified the provisions of Texas Civil Statutes, Articles 6687-1a, 6687-2, and 6687-2b, relating to salvage vehicle dealers. The provisions are now located in Occupations Code, Chapter 2302. House Bill 3588, Article 17, 78th Legislature, Regular Session, 2003, amended the provisions of Transportation Code, Chapter 501, Subchapter E, relating to nonrepairable and salvage motor vehicles, and Occupations Code, Chapter 2302, relating to salvage vehicle dealers.

House Bill 3588 requires the department to adopt rules to establish a list of valid identification documents that must be presented by a person who purchases a nonrepairable or salvage motor vehicle for export only in accordance with Transportation Code, §501.099. House Bill 3588 also requires the Texas Transportation Commission (commission) to adopt rules necessary to administer Occupations Code, Chapter 2302, and necessary to regulate and enforce casual sales of nonrepairable and salvage motor vehicles by salvage vehicle dealers, insurance companies, and salvage pool operators.

These amendments, repeals, and new sections incorporate the provisions of House Bill 2813 and House Bill 3588, Article 17 into the department’s rules.

Throughout, statutory citations are updated to reference new Transportation Code, Subchapter E, and new Occupations Code, Chapter 2302. Nonsubstantive changes in language are made to correct terminology and enhance readability.

Section 17.2, Definitions, is amended to eliminate definitions that are no longer necessary as a result of amendments to Transportation Code, Chapter 501, Subchapter E, and Occupations Code, Chapter 2302, or that no longer apply to Chapter 17, Subchapter A, relating to motor vehicle certificates of title, due to the repeal of §17.8, Certificates of Title for Salvage Vehicles.

The definitions for "automobile recycler," "late model motor vehicle," late model salvage motor vehicle," "new model motor vehicle," "new model salvage motor vehicle," "older model vehicle," and "other negotiable evidence of ownership" are deleted entirely as they are no longer necessary.

The definitions for "actual cash value," "flood damage," and "insurance company" are deleted as they no longer apply to Subchapter A, due to the repeal of §17.8, and are moved to new Subchapter D, Nonrepairable and Salvage Motor Vehicles.

The definitions for "major component part" and "rebuilder" are deleted as they no longer apply to Subchapter A, due to the repeal of §17.8, and are moved to new Subchapter E, Salvage Vehicle Dealers.

The definitions for "casual sale," "nonrepairable motor vehicle," "nonrepairable certificate of title" (now "nonrepairable vehicle title"), "out-of-state buyer," "salvage motor vehicle," "salvage certificate of title" (now "salvage vehicle title"), and "salvage vehicle dealer" are also deleted as they no longer apply to Subchapter A, due to the repeal of §17.8, and are moved to new Subchapter D, Nonrepairable and Salvage Motor Vehicles, and new Subchapter E, Salvage Vehicle Dealers.

Section 17.8, Certificates of Title for Salvage Vehicles, is repealed and applicable repealed provisions are moved to new Subchapter D, Nonrepairable and Salvage Motor Vehicles.

Existing Subchapter D, Salvage Vehicle Dealers, which includes, §§17.60-17.64, is repealed and applicable repealed provisions are moved to new Subchapter E, Salvage Vehicle Dealers.

New Subchapter D, Nonrepairable and Salvage Motor Vehicles, is added to provide requirements for obtaining nonrepairable and salvage motor vehicle titles, the application process, transfer or sale of nonrepairable and salvage motor vehicles, and recordkeeping requirements.

New §17.60, Purpose and Scope, is added to establish the purpose and scope of the subchapter.

New §17.61, Definitions, defines the words and terms applicable to Subchapter D.

New §17.62, Requirement for Nonrepairable or Salvage Vehicle Title, establishes the criteria for classifying a vehicle; describes the requirements for obtaining a nonrepairable or salvage vehicle title for owner retained motor vehicles, self-insured motor vehicles, casual sales, and nonrepairable or salvage motor vehicles that are sold for export only; and provides for voluntary applications for a nonrepairable or salvage vehicle title for motor vehicles that are not classified as nonrepairable or salvage motor vehicles. The provisions relating to actual cash value, estimated cost of repairs, who must apply, voluntary application, and owner retained vehicles are moved from §17.2 and repealed §17.8, and are updated due to House Bill 3588.

New requirements due to House Bill 3588 include prohibiting the operation of an owner retained motor vehicle; requiring the owner of a self-insured motor vehicle that has been damaged and removed from normal operation to obtain a nonrepairable or salvage vehicle title prior to transfer of ownership of the motor vehicle; requiring salvage vehicle dealers, salvage pool operators, and insurance companies, that are authorized to conduct casual sales, to obtain a nonrepairable or salvage vehicle title prior to transfer; and requiring salvage vehicle dealers and governmental entities to obtain a nonrepairable or salvage vehicle title prior to offering the motor vehicle for sale to a non-United States resident.

New §17.63 describes the process and requirements for obtaining a nonrepairable or salvage vehicle title, including the place of application, the information required on an application for a nonrepairable or salvage vehicle title, documentation required to accompany the application, what constitutes evidence of nonrepairable or salvage motor vehicle ownership, recording liens on nonrepairable or salvage vehicle titles, and issuance of nonrepairable and salvage vehicle titles. The provisions relating to the place of application, information to be included on the application, accompanying documentation, and evidence of nonrepairable or salvage vehicle ownership have been moved from repealed §17.8. House Bill 3588 added some additional information required to be on the application; updated lien requirements; and required more information to be on the face of a nonrepairable vehicle title. In addition, the department has clarified what accompanying documentation it requires when out-of-state evidence of ownership documents are surrendered by an insurance company in order to ensure that vehicles brought in from out of state are legally titled. Additionally, as a result of House Bill 3588, procedures and requirements have been added for insurance company applications when the insurance company is unable to obtain the proper assignment on the surrendered evidence of ownership.

New §17.64, Replacement of Nonrepairable or Salvage Motor Vehicle Ownership Documents, includes provisions moved from repealed §17.8. This section provides that all replacement applications will be processed at the department’s Austin headquarters in order to centralize processing of all nonrepairable and salvage document issuance. This section also provides the notation that will be reflected on a replacement document, and that a certified copy, with some exceptions, will be issued.

The replacement document for nonrepairable certificates of title and salvage certificates issued prior to September 1, 2003, will be an original salvage vehicle title. Replacement nonrepairable certificates of title cannot be issued because a nonrepairable motor vehicle can no longer be rebuilt or retitled if the nonrepairable vehicle title is issued on or after September 1, 2003. Replacement salvage certificates cannot be issued because House Bill 3588 requires that the department discontinue issuing salvage certificates on September 1, 2003, and a salvage certificate issued prior to September 1, 2003, is deemed to be a salvage vehicle title.

New §17.65, Dismantling, Scrapping, or Destruction of Motor Vehicles, describes the reporting and recordkeeping requirements for motor vehicles that are to be dismantled, scrapped, or destroyed. These provisions have been moved to new §17.65, from repealed §17.8 and have been updated due to House Bill 3588. Additionally, a provision has been added to require that the owner certify, on the report submitted to the department, that any unexpired license plates or registration validation stickers assigned to the vehicle have been removed. This requirement is added to ensure that all unexpired registration validation stickers are removed from the motor vehicle, including windshield validation stickers, to prevent them from being used on unregistered motor vehicles.

New §17.66, Rights of Holder of Nonrepairable or Salvage Motor Vehicle Documents, describes the rights of holders of nonrepairable and salvage ownership documents that were issued prior to and on or after September 1, 2003, as provided by House Bill 3588, including the prohibition on rebuilding or retitling nonrepairable motor vehicles that are issued a nonrepairable vehicle title on or after September 1, 2003.

New §17.67, Sale, Transfer, or Release of Ownership of a Nonrepairable or Salvage Motor Vehicle, describes the allowances and restrictions on the sale, transfer, or release of nonrepairable and salvage motor vehicles for which a nonrepairable or salvage vehicle title has and has not been issued; and for self-insured nonrepairable or salvage motor vehicles, casual sales by salvage vehicle dealers, salvage pool operators, or insurance companies, and sales to persons who reside outside the United States, as provided by House Bill 3588. This section also describes new recordkeeping requirements for sellers of nonrepairable or salvage motor vehicles in a casual sale and for export only. The provisions relating to flood damaged motor vehicles are moved to new §17.67, from repealed §17.8.

New requirements due to House Bill 3588, as prescribed in new §17.67, include allowances and restrictions on the sale or transfer of nonrepairable and salvage motor vehicles by salvage vehicle dealers when a nonrepairable or salvage vehicle title has not been issued; restrictions applicable to insurance companies; requirements for the titling and sale of self-insured nonrepairable or salvage motor vehicles; establishing the number of nonrepairable or salvage motor vehicles that may be sold to a person in a calendar year by a salvage vehicle dealer, salvage pool operator, or insurance company in a casual sale; and describing the records required to be maintained for each casual sale, including that records may be maintained on a form provided by the department or electronically.

In addition, §17.67 establishes the conditions under which export-only sales, or the sale of nonrepairable or salvage motor vehicles to persons who reside outside the United States, may be conducted; provides who may sell nonrepairable or salvage motor vehicles for export only, including clarification that a salvage pool operator acting as an agent for an insurance company may sell export-only nonrepairable or salvage motor vehicles; establishes the requirement that the seller obtain proof of the buyer’s identity and certification that the vehicle will be removed from the United States and the vehicle will not be returned to any state of the United States as a vehicle titled or registered under the manufacturer’s identification number; establishes a listing of acceptable identification for a foreign buyer as required by House Bill 3588; establishes recordkeeping requirements for each export-only sale; and provides the requirement that the seller stamp FOR EXPORT ONLY on the title. Additionally, this section establishes the requirement that sellers of export-only nonrepairable or salvage motor vehicles report export-only sales to the department, on a form provided by the department or in an electronic format approved by the department, within 30 days of the date of sale in order to facilitate noting the motor vehicle record of the export-only sale and to prevent issuance of subsequent Texas Certificates of Title for the export-only motor vehicles.

New §17.68, Rebuilt Salvage Motor Vehicles, describes the requirements for and restrictions on rebuilding and retitling nonrepairable and salvage motor vehicles as provided by House Bill 3588, including the requirement to apply for a Rebuilt Salvage Certificate of Title, the place of application, fees, accompanying documentation, what constitutes acceptable evidence of ownership for a rebuilt salvage motor vehicle, and issuance of rebuilt salvage certificates of title.

The information relating to the requirement to apply for a Rebuilt Salvage Certificate of Title, the place of application, accompanying documentation, what constitutes acceptable evidence of ownership for a rebuilt salvage motor vehicle, and issuance of rebuilt salvage certificates of title has been moved from repealed §17.8 to new §17.68, and has been updated due to House Bill 3588.

New provisions due to House Bill 3588, also include the requirement that, at the time of application, applicants for Rebuilt Salvage Certificates of Title must pay a $65 rebuilt salvage fee and must submit a separate form that describes each major component part used to repair the motor vehicle and lists the vehicle identification number for the motor vehicle. In addition, the requirement for a written certification statement of inspection from the Department of Public Safety is eliminated.

New Subchapter E, Salvage Vehicle Dealers, is added to provide definitions; requirements for and exemptions from salvage vehicle dealer and agent licensing; classifications of salvage vehicle dealer licenses; license application, issuance and renewal; requirements for registration of the place of business and for notifying the department of changes in a licensee’s status; duties of licensees, including recordkeeping and reporting requirements; sale restrictions applicable to salvage vehicle dealers; and provisions for denial, suspension, or revocation of a salvage vehicle dealer license. In addition, new provisions are added as a result of enactment of House Bill 3588.

New §17.70, Purpose and Scope, establishes the purpose and scope of the subchapter.

New §17.71, Definitions, defines the words and terms applicable to new Subchapter E, Salvage Vehicle Dealers.

New §17.72, Classifications of Salvage Vehicle Dealer Licenses, describes who must obtain a salvage vehicle dealer license; classifications of licenses; and exemptions from salvage vehicle dealer licensing requirements. These provisions have been moved from repealed §17.62. The definitions for the salvage vehicle dealer classifications, found in new §17.72(b), have been moved from repealed §17.61 and are unchanged.

New §17.73, Salvage Vehicle Dealer License, describes the application procedure; the requirements when an assumed name is used; and fees for salvage vehicle dealer licenses. The provisions for whom must obtain a salvage vehicle dealer license; classifications of licenses; exemptions; assumed names; initial application; and fees for salvage vehicle dealer licenses have been moved from repealed §17.61 and §17.62. In addition, the exemptions from salvage vehicle dealer licensing have been updated as a result of House Bill 3588 to clarify that a person who buys no more than five (5) salvage or nonrepairable motor vehicles in a calendar year at a casual sale or casually repairs, rebuilds or reconstructs fewer than three nonrepairable or salvage motor vehicles in a calendar year is exempt from obtaining a salvage vehicle dealer license.

New §17.74, Salvage Vehicle Agents, describes who must obtain a salvage vehicle agent license; the number of agents a salvage vehicle dealer may authorize; procedures for application; and fees for a salvage vehicle agent license. These requirements and procedures have been moved from repealed §17.62, and have been updated due to House Bill 3588.

New provisions, added by House Bill 3588, exempt a salvage vehicle dealer; a partner, owner or officer of a business entity that holds a salvage vehicle dealer license; an employee of a salvage vehicle dealer; or a person that only transports salvage motor vehicles for a licensed salvage vehicle dealer from obtaining a salvage vehicle agent license.

New §17.75, Investigation, Report by the Department, and Issuance of License, describes the procedures for investigation of the qualifications of an applicant; reporting of the investigation results by the department; and issuance of salvage vehicle dealer and agent licenses. These provisions have been moved from repealed §17.62. In addition, the department has added information to advise that the department may conduct criminal background checks of applicants in order to verify the validity of an applicant’s statement on the application regarding the criminal history of the applicant.

New §17.76, Place of Business, describes the requirement for registration of a salvage vehicle dealer’s business location and the prohibition of off-site sales. These provisions have been moved from repealed §17.63.

New §17.77, Change of Licensee’s Status, describes the requirements for notification to the department by a licensed salvage vehicle dealer of a change in the dealer’s status, including a licensee name change, change of ownership, change in operating status, or termination of an agent operating under the salvage vehicle dealer’s license. These provisions have been moved from repealed §17.63.

New §17.78, License Renewal, describes the procedures for renewal of salvage vehicle dealer and agent licenses, including license expiration, renewal application, non-renewal requirements, renewal of an expired license, and fees for renewal. These provisions have been moved from repealed §17.63.

New §17.79, Licensee Duties, provides requirements for salvage vehicle dealers to obtain proper evidence of ownership when acquiring a nonrepairable or salvage motor vehicle; recordkeeping and reporting requirements for dismantled, scrapped, or destroyed motor vehicles; requirements for assignment of unique inventory numbers to component parts; and restrictions on the sale of nonrepairable or salvage motor vehicles, including casual sales and export-only sales of nonrepairable or salvage motor vehicles.

The provisions relating to obtaining proper evidence of ownership when acquiring a nonrepairable or salvage motor vehicle; recordkeeping and reporting requirements for dismantled, scrapped, or destroyed motor vehicles; and requirements for assignment of unique inventory numbers to component parts have been moved from repealed §17.63. In addition, a requirement has been added to require that the owner of a vehicle that is to be dismantled, scrapped, or destroyed must certify, on the report submitted to the department, that any unexpired license plates or registration validation stickers assigned to the vehicle, have been removed. This requirement is added to ensure that all unexpired registration validation stickers are removed from the vehicle, including windshield validation stickers, to prevent them from being used on unregistered motor vehicles.

New requirements due to House Bill 3588 include restrictions on the sale of nonrepairable and salvage motor vehicles applicable to salvage vehicle dealers, including allowable sales when a nonrepairable or salvage vehicle title has and has not been issued for the motor vehicle; that a salvage vehicle dealer may sell up to five nonrepairable or salvage motor vehicles to a person in a calendar year in casual sale; and that salvage vehicle dealers may sell nonrepairable or salvage motor vehicles to a person who resides in a jurisdiction outside the United States for export only.

Section 17.79(d)(4) is adopted with changes from the proposed text by correcting the cross-reference to §17.80. The correct cross-reference is to §17.80(f), not (e).

New §17.80, Records of Purchases, Sales, and Inventory, establishes the recordkeeping requirements for salvage vehicle dealers, including how records must be maintained, what information must be contained in those records, and specific recordkeeping requirements for motor vehicles that are dismantled, scrapped, or destroyed, casual sales, and export-only sales.

The provisions relating to maintenance of records, the form of those records, and used vehicle parts dealer records have been moved from repealed §17.63. The provisions relating to records of dismantled, scrapped or destroyed vehicles have been moved from repealed §17.8, with the addition of the new requirement that salvage vehicle dealers maintain in their records a photocopy of the front and back of any out-of-state evidence of ownership surrendered to the department for a vehicle that was dismantled, scrapped, or destroyed. This requirement is added to facilitate issuance of a nonrepairable or salvage vehicle title to the salvage vehicle dealer if, at a later date, the salvage vehicle dealer needs an ownership document for the motor vehicle.

New requirements added as a result of House Bill 3588 include the records required to be maintained for each casual sale made during the previous 36 months and the requirements for maintaining records of each export-only sale for three years from the date of sale. These records must be maintained on the salvage vehicle dealer’s business premises and must be made available for inspection upon request.

Section 17.80(b)(3) is adopted with changes from the proposed text by adding the word "number" to state that the vehicle identification number is required to be included in the required records.

New §17.81, Denial, Suspension, or Revocation, provides the reasons and procedures for denial, suspension, or revocation of a salvage vehicle dealer or agent license; states that the department will mail notice of the reason for denial, suspension or revocation of a license; explains the rights of the dealer or agent to request an administrative hearing upon denial, suspension or revocation of their license, and re-application after revocation of a license; and explains that license fees will not be refunded if a license is revoked or suspended. These provisions have been moved from repealed §17.64. In addition, the department has added a new policy regarding denial of a license. Section 17.81(a)(5) provides that the department will deny an application for a salvage vehicle dealer license if the applicant is an immediate family member of a person whose salvage vehicle dealer license has been revoked and the application is for the same location as the revoked salvage vehicle dealer. This provision is added to prevent circumvention of statute by preventing the owner of a salvage yard, for which the owner’s license has been revoked, from operating the salvage yard under a license obtained by an immediate family member.

COMMENTS

A public hearing was held on December 9, 2003, in Austin. Oral and written comments against the rules were received from Dave England, representing the Texas Independent Auto Resellers Association (TIARA). CoPart Auto Auctions agreed with the oral comments from TIARA. General written comments were received from Insurance Auto Auctions (IAA), Texas Automotive Recyclers Association (TARA), and State Farm Insurance. Oral and written comments received are responded to as follows.

Comment: Concerning §17.61(1), §17.71(1), and §17.79(d)(3), TIARA requested that the term "at auction" be struck in order to conform to the provisions of HB 3588, relating to casual sales.

Response: The department disagrees with the comment; however, §17.61(1) and §17.71(1) have been amended to clarify that the "at auction" restrictions apply only to an insurance company, as provided in Transportation Code, §501.0092(d), and to salvage pool operators, as provided in Occupations Code, §2302.204.

Comment: Concerning §17.61(4), State Farm requested the definition for "damage" be broadened or include all types of damage covered by an insurance policy, such as vandalism on the interior, sandstorm (A/C ducts), debris falling on vehicles, and the vehicle being upset.

Response: The department disagrees with the comment. The existing definition of "damage" would encompass these types of damage and clearly defines what is not considered to be "damage."

Comment: Concerning §17.61(13), State Farm requested the definition for "nonrepairable motor vehicle" be amended by adding "flooded, stripped of major component parts" in order to clarify and track the definition of "damage."

Response: The department disagrees with the comment. The addition is unnecessary since the definition of "nonrepairable motor vehicle" includes the term "damage."

Comment: Concerning §17.61(16), State Farm stated the list of documents that are not considered to be "out of state ownership documents" is unnecessary.

Response: The department disagrees as the listing of excepted documents is provided for clarification.

Comment: Concerning §17.61(19), State Farm proposed edits to the definition of "salvage motor vehicle" to make it clearer as to what is not included in the definition.

Response: The department agrees with the comment. For clarity, a few words have been changed to describe what is not a salvage motor vehicle in §17.61(19) and §17.71(15).

Comment: Concerning §17.61(20), State Farm recommended that the language be amended to exempt from the definition of "salvage vehicle dealer," a person who casually repairs, rebuilds, or reconstructs five, rather than three, salvage motor vehicles in the same calendar year, in order to track the definition of casual sale.

Response: The department disagrees as the definition in §17.61(20) tracks the definition for salvage vehicle dealer provided in Transportation Code, §501.091(17), which specifies that the term salvage motor vehicle dealer "does not include a person who casually repairs, rebuilds, or reconstructs fewer than three salvage motor vehicles in the same calendar year." As per the definition quoted, the limitation is to the number that may be casually repaired, rebuilt, or reconstructed by an unlicensed person, not the number that may be sold in a casual sale. This is also clarified in the discussion relating to the comment to §17.72(c)(3) regarding exemptions from salvage vehicle dealer licensing. The department has amended §17.71(17) by adding the term "casually" to track the definition of "salvage vehicle dealer," as provided in law.

Comment: Concerning §17.62, State Farm requested the rule be amended to allow documentation to support that a motor vehicle has been wrecked, damaged, or burned to the extent that the vehicle is a nonrepairable motor vehicle in order to eliminate the need for insurance companies to write an estimate for vehicles that are clearly nonrepairable from a visible inspection.

Response: The department agrees with the comment. Section 17.62(a) has been amended by adding new paragraph (2) to clarify the methods that may be used by insurance companies when determining whether a motor vehicle is damaged to the extent that it is a salvage or nonrepairable motor vehicle. New paragraph (2) provides that an alternate method that is commonly used by the insurance industry may be used to determine whether the damage is sufficient to classify the motor vehicle as a nonrepairable motor vehicle. Subsequent paragraphs have been renumbered.

Comment: Concerning §17.62(a), State Farm requested that language relating to the methods insurance companies are allowed to use for estimating the actual cash value of a motor vehicle, that were repealed (repealed §17.61(1)(B)), be reinstated to allow insurance companies to use market surveys for this purpose.

Response: The department agrees with the comment. Section 17.62 has been amended by adding new (a)(3)(B) to reinstate the repealed language to allow insurance companies to use any other procedure recognized by the insurance industry, including market surveys, that is applied in a uniform manner. This correlates with the change to §17.62(a)(2).

Comment: Concerning §17.62(a)(2), State Farm requested the rule be amended to clarify that when estimating the cost of repairs, exterior paint damage should be included in the estimate unless the damage is isolated only to the exterior paint.

Response: The department agrees with the comment. Section 17.62(a)(2) (renumbered as (4)) has been amended for clarification.

Comment: Concerning §17.62(c)(4), State Farm requested the rule be amended to clarify that nonrepairable vehicles (unlike salvage vehicles) may not be operated on a public highway even with a branded title, and suggested adding a definition of public highway.

Response: The department agrees that clarification is needed. Section 17.62(c)(4) has been amended and new paragraph (c)(5) has been added to clarify that an owner retained salvage or nonrepairable motor vehicle may not be operated on a public highway, unless the motor vehicle has been rebuilt, titled as a rebuilt salvage, if applicable, and registered. The department has not added a definition of "public highway," because a definition already exists in Transportation Code, §502.001.

Comment: Concerning §17.63(d)(3)(B)(i), State Farm requested the rule be amended to allow insurance companies to submit copies, in lieu of originals, of the proof of certified mail notifications made to owners of motor vehicles when the insurance company is unable to obtain proper assignment of title to the motor vehicle.

Response: The department agrees with the comment. Section 17.63(d)(3)(B) has been amended to allow submission of copies of the proof of certified mail notification, if an insurance company maintains their mail records electronically.

Comment: TIARA requested that §17.68(d)(3)(B), relating to the requirement that an applicant provide a statement of physical inspection, if a rebuilt salvage motor vehicle is not registered at the time of application, be struck from the rule as there is no requirement of law for such an inspection and the requirement is ambiguous.

Response: The department agrees with the comment. Section 17.68(d)(3)(B) has been struck from the rule. However, §17.68 has also been amended by adding new (d)(2)(F) to require that an applicant for a rebuilt salvage certificate of title must certify on the rebuilt affidavit that the vehicle identification number disclosed on the affidavit is the same as the vehicle identification number affixed to the vehicle, if the vehicle is not registered at the time of application.

Comment: Concerning §17.72(c)(3), TIARA stated the rules lack continuity with the provisions of HB 3588 regarding the number of salvage motor vehicles that an unlicensed person may sell in a calendar year.

Response: The department agrees that the provisions of HB 3588 place no limits on the number of nonrepairable or salvage motor vehicles that an unlicensed person may sell in a calendar year. Therefore, (c)(3) has been deleted. However, the provisions of HB 3588 are inconsistent regarding the requirements for a salvage vehicle dealer license, specifically, the number of nonrepairable or salvage motor vehicles an unlicensed person may purchase at casual sale in a calendar year. Transportation Code, §501.091(2), defining a "casual sale, provides that "not more than five nonrepairable motor vehicles or salvage motor vehicles" may be sold to the same unlicensed person in a calendar year; however, Occupations Code, §2302.204 describes who is not considered a salvage vehicle dealer as "a person who purchases fewer than three nonrepairable motor vehicles or salvage motor vehicles from a salvage vehicle dealer…." In order to read these statutes together as much as possible, but also to give weight to the definition of "salvage vehicle dealer" since the legislature’s intent was for the department to regulate salvage vehicle dealers and in doing so, to adopt rules to regulate casual sales, as required in Occupations Code, §2302.204, (c)(1) has been amended to allow an unlicensed person to purchase no more than five nonrepairable or salvage motor vehicles during a calendar year, and (c)(4) has been renumbered as (c)(3) and has been amended to clarify that a person is exempt from the salvage vehicle dealer licensing requirements if the person casually repairs, rebuilds, or reconstructs fewer than three salvage motor vehicles in the same calendar year. Additionally, new (c)(4) has been added to clarify that a person who is a non-resident of the United States who purchases nonrepairable or salvage motor vehicles for export only is exempt from salvage vehicle dealer licensing and (c)(5) has been deleted as it is no longer necessary or applicable. Subsequent paragraphs have been renumbered accordingly.

In addition, as a result of this comment and after further review, §17.61(20) and §17.71(17) have been amended by deleting "purchases or" in order to be consistent with the statute.

Comment: Concerning §17.79(b)(1)(B)(iii), TARA requested clarification of how a salvage vehicle dealer is expected to execute removal and surrender of any unexpired registration validation stickers assigned to a vehicle that is dismantled, scrapped, or destroyed.

Additionally, State Farm requested that §17.65(a)(1)(B) and §17.79(b)(1)(B)(ii) be amended to allow salvage vehicle dealers to provide evidence that the license plates from a motor vehicle that is to be dismantled, scrapped, or destroyed, were removed and destroyed and therefore cannot be submitted, instead of requiring the actual license plates to be surrendered to the department.

Response: The department agrees with the comments. Section 17.65(a)(1) and §17.79(b)(1) have been amended to require certification on the report submitted to the department that any unexpired license plates or unexpired registration validation stickers have been removed from the dismantled, scrapped, or destroyed motor vehicle, in accordance with Occupations Code, §2302.252, instead of requiring the surrender of those items with the report.

Comment: Concerning §17.80(e) and (f), relating to the required maintenance of records of casual sales and export-only sales, IAA requested that salvage vehicle dealers utilizing electronic record archival be allowed to maintain those records at a site other than on the dealer’s business premises, and that they be allowed at least five business days for retrieval of those records rather than requiring they be made available upon request.

Response: The department disagrees with the comment. Transportation Code, §501.099 and §501.105 require the records to be maintained on the business premises of the dealer, and Occupations Code, §2302.258, requires salvage vehicle dealers to provide copies of required records upon demand of a peace officer.

The Texas Department of Transportation (department) adopts amendments to §18.1 and §18.2, concerning general provisions; §§18.13, 18.14, 18.16, and 18.19, concerning motor carrier registration; §18.31 and §18.32, concerning records and inspections; §18.71, concerning enforcement; and §§18.80-18.82, 18.87, 18.88, 18.90-18.94, and 18.96, concerning vehicle storage facilities; and new Subchapter H, §§18.100-18.104, concerning nonconsent towing fees schedule. Sections 18.13 and 18.96 are adopted with changes to the proposed text as published in the November 14, 2003, issue of the Texas Register (28 TexReg 10150). Sections 18.1, 18.2, 18.14, 18.16, 18.19, 18.31, 18.32, 18.71, 18.80-18.82, 18.87, 18.88, 18.90-18.94, and 18.100-18.104 are adopted without changes to the proposed text as published in the November 14, 2003, issue of the Texas Register (28 TexReg 10150) and will not be republished.

EXPLANATION OF ADOPTED AMENDMENTS AND NEW SECTIONS

The amendments and new sections are necessary to update statutory references, to clarify existing language, and to implement the provisions of House Bill 849 and Senate Bills 1063, 1184, and 1904, 78th Legislature, Regular Session, 2003. House Bill 849 amended Transportation Code, Chapter 643, Subchapter E, to require towing companies that perform nonconsent tows to file a nonconsent towing fees schedule with the department, to post the schedule at licensed vehicle storage facilities to which vehicles are delivered, and to post the schedule in view of persons who claim vehicles. Senate Bill 1184 amended Transportation Code, Chapter 548, Subchapter A, to clarify the definition of a bus as being one designed or used to transport more than 15 passengers.

The amendments to §18.1 and §18.2 change a legal reference to reflect the codification of the Vehicle Storage Facility Act from Texas Civil Statutes Article 6687-9a to Occupations Code, Chapter 2303; add new language regarding the filing of nonconsent towing fee schedules; clarify the definition of a "commercial motor vehicle bus;" add definitions of "consent tow," "nonconsent tow," and "towing company;" and change the name of a Motor Carrier Division branch from "Compliance and Enforcement" to "Motor Carrier Operations" section.

The amendments to §§18.13, 18.14, 18.16, and 18.19, implement new federal drug-testing certification requirements, tow truck per-vehicle fees, nonconsent towing on-hook cargo insurance requirements, notification to law enforcement of revoked motor carrier liability insurance, clarify the definition of a commercial motor carrier bus, define employee, and revise the description of hazardous substances to conform with federal regulations 49 CFR §387.9.

More specifically, §18.13 is amended to comply with various sections of Transportation Code, Chapter 643, which were affected by House Bill 849 and Senate Bill 1904. To implement new Transportation Code, §643.101(d), subsection (a)(6)(B) is amended to require tow truck companies to include information regarding whether or not the company performs nonconsent tows. To implement Senate Bill 1904, subsection (a)(9) is amended to require motor carriers to certify, as part of their application, that they comply with federal drug testing requirements, including identifying any consortium the motor carrier participates in as well as the requirement to report a positive drug test to the Department of Public Safety in a manner prescribed by the Department of Public Safety. Paragraph (9) is also amended to clarify that the term "employee" as used in that paragraph includes all employees as defined in Title 49, Code of Federal Regulations, Part 40.3. Subsections (a)(11) and (e) include language implementing the new registration fees for tow trucks mandated by House Bill 849 in Transportation Code, §§643.053, 643.058, and 643.061. Subsection (f) is revised to make department procedures for submitting a supplemental application consistent with the requirements of House Bill 849 addressed to tow truck companies performing nonconsent tows and the requirements of Senate Bill 1904 that motor carriers inform the department regarding the drug testing consortiums that are being used.

To comply with House Bill 849, §18.14 (b)(1)(B) is amended to add language detailing registration fees charged to tow truck companies.

The figure in §18.16(a)(1) is amended to add the phrase "or used" to numbered items "1" and "4" to clarify that the minimum insurance levels apply to buses both designed or used to transport the specified number of passengers. Numbered item "10" in the figure amends the description of hazardous substances to conform with the language in 49 CFR §387.9. Transportation Code, §643.101 gives the department authority to set insurance levels for different classes of vehicles and for different types of cargo.

Section 18.16 (b)(1) and (2) are amended by adding catchlines to conform to the style of new paragraph (3) of that subsection.

New subsections (b)(3) and (e)(1)(C) are added to §18.16 to include language, required by House Bill 849, requiring tow truck companies that perform nonconsent tows to provide the department proof that they maintain on hook cargo insurance for at least $50,000 as required by Transportation Code, §643.101.

New subsection (i) is added to §18.16, to detail the requirement that the department provide law enforcement notice when a motor carrier's registration has been revoked for failing to maintain the appropriate levels of liability insurance.

Section 18.19(a)(3) is amended to make it consistent with House Bill 849 regarding registration fees for tow truck companies.

The amendments to §18.31 and §18.32 update references from Texas Civil Statutes, Article 6675c, §3A, to the Transportation Code, Chapter 643, Subchapter E, regarding tow trucks. Section 18.32 also implements a new requirement from House Bill 849 that motor carriers which perform nonconsent tows shall maintain a nonconsent towing fees schedule and the schedule shall be posted at all vehicle storage facilities where vehicles are delivered.

The amendments to §18.71 update legal references to Transportation Code, Chapter 643, and add reference to Subchapter H, regarding nonconsent towing fees schedule.

The amendments to §§18.80-18.82, 18.87, 18.88, 18.90-18.94, and 18.96 modify legal references to reflect codification changes that moved the Vehicle Storage Facility Act from Texas Civil Statutes Article 6687-9a to Occupations Code, Chapter 2303, the Texas Motor Vehicle Commission Code from Texas Civil Statutes, Article 4413(36) to Occupations Code, Chapter 2301, and Texas Civil Statutes, Article 6701g-3, to Transportation Code, Chapter 685; add "electronic certified mail" to the types of ways that information may be transmitted; add requirements that tow tickets and wrecker slips are to contain the registered name of the tow truck company and the certificate of registration number; authorized representatives of nonconsent towed vehicles may have access to nonconsent towing fees schedules at vehicle storage facilities; vehicle storage facilities must post a sign about the availability of nonconsent towing fees schedules including specifics on format, language, and placement of the sign, and timeliness of the fees schedules; and change a vehicle storage facility’s impoundment fee assessment limit from $10 to $20.

Section 18.80 is amended to clarify existing language and update statutory reference.

Section 18.81 is amended to update statutory references.

Section 18.82 is amended to update the statutory reference in the definition of "Act."

Section 18.87 is amended to allow vehicle storage facility owners to provide notification to vehicle owners by electronic certified mail as required by House Bill 849, Occupations Code, §2303.151(d). Section 18.87 is also amended to update statutory references.

The statutory reference in §18.88(c)(3) is amended to reflect the change made by House Bill 2971, 78th Legislature, Regular Session, 2003, which repealed Transportation Code, §502.281 and recodified it as Transportation Code, §504.508.

Section 18.88 is amended by adding new subsection (d) requiring vehicle storage facilities to ensure that certain documents received when a vehicle is brought to the vehicle storage facility without the owner’s consent contain the registered name of the tow truck company and the certificate of registration number. This information will help vehicle owners and vehicle storage facilities identify responsible parties in the event a question arises over the care and custody of a vehicle. Further, this requirement is consistent with House Bill 849, which added Transportation Code, §§643.203-643.208.

Section 18.90(1) is amended to include the tow tickets described in §18.88 as documents the vehicle owner is entitled to inspect. Paragraph (4) is added to require that vehicle owners be given access to the towing fee schedules required to be posted by Transportation Code, §643.208, enacted by House Bill 849.

Section 18.91 is amended by adding subsection (d)(3), requiring vehicle storage facilities to post a sign notifying vehicle owners that nonconsent towing fees schedules are available for viewing. Transportation Code, §643.208, requires that all towing and storage fees be posted at the vehicle storage facility. In interpreting this requirement, the department has decided, consistent with prior notice requirements, to allow vehicle storage facilities to post a sign alerting vehicle owners of their rights to view certain documents with clear instructions on how to obtain the documents. Upon information and belief, the nonconsent towing fees schedules will be voluminous documents, not easily displayed in their entirety without alterations of the vehicle storage facilities office areas. Renumbered paragraph (4) is amended to update a cross-reference. Renumbered paragraph (5) is amended to reference new paragraph (3) in the list of signs that may be combined into a single sign.

Section 18.92 is amended to make the section consistent with §18.88(d) by including the tow tickets and wrecker slips as documents that must be provided to the person claiming a vehicle.

Section 18.93 is revised to change a vehicle storage facility’s impoundment fee assessment limit from $10 to $20, as required by Occupations Code, §2303.155(b)(2), as amended by House Bill 849.

Sections 18.94 and 18.96 are revised to update statutory references and Texas Administrative Code citations.

New subchapter H, §§18.100-18.104, prescribes procedures towing companies must follow when filing nonconsent towing fees schedules with the department and posting them at vehicle storage facilities. These amendments implement the requirements of House Bill 849.

New §18.100 describes the purpose and scope of the new subchapter, which is to prescribe procedures by which a towing company that performs nonconsent tows shall comply with filing a nonconsent towing fees schedule and posting provisions.

New §§18.101, 18.102, and 18.103 state the requirements for filing a nonconsent towing fees schedule with the department, describe the department's duties in regards to these filings, require that a towing company that performs nonconsent tows shall review its current nonconsent towing fees schedule posted on the department website before January 31st of each year, and update it only as needed. The department shall consider the most current schedule to be the one on file on January 31st of each year and does not require a new filing if no changes are made to the schedule. Section 18.103 also states the requirements for posting the nonconsent towing fees schedule at vehicle storage facilities. Sections 18.101, 18.102, and 18.103, implement House Bill 849, Transportation Code, §§643.203-643.208, and department policies made necessary by this new legislation.

In accordance with Transportation Code, §643.252, new §18.104, states that the sanctions provided for in Subchapter F of this chapter, regarding enforcement, will be used as sanctions for violations of this subchapter.

COMMENTS

A comment was received from the Department of Public Safety (DPS) and the Texas Motor Transport Association.

Comment: Section 18.13(a)(9)(B) does not specify how reports of positive drug tests results will be provided to the DPS and does not expressly define the term "employee" to have the same meaning as the term is defined in Title 49, Code of Federal Regulations, Part 40.3

Response: The department agrees with the comment and is adopting §18.13 (a)(9)(B) with changes. These changes specify that reports of positive drug tests must be submitted to DPS in the manner required by DPS so that DPS may use the information to perform its statutorily required duties. Additional changes to this subparagraph define "employee" to have the same meaning as that term is given in Title 49, Code of Federal Regulations, Part. 40.3, which removes possible ambiguity as to the scope of a motor carriers reporting obligations.

The department is adopting §18.96 with changes to update a legal citation from §14B to 2303.157 of the Vehicle Storage Facilities Act.

Subchapter A. GENERAL PROVISIONS

Subchapter B. UTILITY ADJUSTMENT, RELOCATION, OR REMOVAL

The Texas Department of Transportation (department) adopts the repeal of §26.1 and §26.2, concerning general provisions; §§26.11-26.16, concerning creation of a regional mobility authority; §§26.21-26.23, concerning revisions to regional mobility authority--additions, withdrawals, and dissolution; §§26.31-26.34, concerning powers and administration of a regional mobility authority; §§26.41-26.46, and 26.48, concerning development of a turnpike project; §§26.51-26.56, concerning maintenance and operation of a turnpike project; §§26.61, 26.62, 26.64 and 26.65, concerning surplus revenue; and §§26.71-26.74, concerning conversion of non-tolled state highway; and §§26.81-26.84, concerning reports, audits, and records. The department simultaneously adopts new §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; §§26.31-26.35, Approval of a Transportation Project; §§26.41-26.47, Conversion and Transfer of TxDOT Facility; and §§26.51-26.55, Miscellaneous Operation Provisions; and §§26.61-26.64, Reports and Audits. New §§26.11, 26.13, 26.16, 26.21, 26.31, 26.41-26.44, 26.51, and 26.53 are adopted with changes to the proposed text as published in the November 14, 2003, issue of the Texas Register (28 TexReg 10172). The repeal of §§26.1, 26.2, 26.11-26.16, 26.21-26.23, 26.31-26.34, 26.41-26.46, 26.48, 26.51-26.56, 26.61, 26.62, 26.64, 26.65, 26.71-26.74, and 26.81-26.84 and new §§26.1, 26.2, 26.12, 26.14, 26.15, 26.22, 26.23, 26.32-26.35, 26.45-26.47, 26.52, 26.54, 26.55, and 26.61-26.64 are adopted without changes to the proposed text and will not be republished.

EXPLANATION OF ADOPTED REPEALS AND NEW SECTIONS

House Bill 3588, 78th Legislature, Regular Session, 2003, repealed Transportation Code, §361.003, governing regional mobility authorities (RMAs) and enacted a new, comprehensive RMA statute that is codified at Transportation Code, Chapter 370. Chapter 370 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 transportation 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.

The adopted rules are much less burdensome on RMAs and address fewer issues due to the following reasons. (1) The former RMA statute granted the commission broad rulemaking powers. The new statute itemizes the commission's rulemaking powers, which are primarily limited to: governing the creation of an authority; governing the commission's approval of a project that will connect to the state highway system or a department rail facility; establishing design and construction standards for those projects; establishing minimum audit and reporting requirements and standards, establishing minimum ethical standards for authority directors and employees; governing the authority of an RMA to contract with Mexico; and governing other commission approval required by the RMA statute, such as the transfer of a department highway to an RMA. (2) The statute primarily limited RMAs to developing turnpikes. The new statute authorizes RMAs to develop tolled and non-tolled highways, rail, airports, and public utility facilities. The new rules address these additional transportation modes. (3) The former statute provided that RMA turnpikes would be a part of the state highway system. Under the new statute, RMA projects, unless the department and the RMA agree otherwise, are not a part of the state highway system. The commission had felt a great responsibility to regulate and oversee the design, construction, maintenance, and operation of RMA turnpikes due to the commission's statutory responsibility for the state highway system. Now that RMA turnpikes will not be on the state highway system, the commission will not regulate maintenance or operation, and will limit department oversight of design and construction to the connection of the RMA facility with a department facility (e.g., interchanges). (4) The former statute was brief, and the commission felt a responsibility to address a number of issues not addressed by the statute. RMAs now operate under a comprehensive statute that allows the commission to remove a number of issues from its rules.

The commission appointed an advisory committee to advise the department on the development of the rules. The advisory committee was composed of seven members representing diverse regions of the state that had formed an RMA or demonstrated an interest in doing so. The advisory committee provided various suggestions that were included in the revised rules. The advisory committee recommended that the commission revise the rules.

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. The definitions of "public utility facility," "revenue," "surplus revenue," "transportation project," and "turnpike project" are statutory (Transportation Code, §370.003) and are provided for the reader's convenience.

SUBCHAPTER B. CREATION OF A REGIONAL MOBILITY AUTHORITY

Section 26.11. Petition. 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 a potential candidate project or system of projects that the RMA may develop. The rule, therefore, requires minimal information on a potential candidate project. 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 the candidate project or system of projects 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 the candidate project or system of projects. 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 that will enable the commission to understand the financial scope of the project or system of projects. This plan will also give the commission an idea of the potential financial commitment to be required of the department. This information is required only if available to the petitioner.

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.

To allow the commission to consider the long-term plans of a petitioner, the petitioner must describe any other projects the petitioner is considering to be developed by the RMA.

To help ensure fair representation of affected political subdivisions, the petitioner must submit representation criteria for the selection of RMA board directors and a description of how they are to be appointed.

Transportation Code, §370.161(b), authorizes the City of El Paso to create an RMA in the same manner as a county. This section recognizes that statute and requires a resolution from the city council indicating its approval of the creation by the city of an RMA.

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 at least one hearing in at least one 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 public comments received at the public hearings, any resolutions of support from affected political subdivisions, 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 transportation in the region, the commission wants to ensure that the RMA will benefit all affected parties. To ensure consistent region-wide planning, the commission must find that each candidate highway project is consistent with the Texas Transportation Plan, the metropolitan transportation plan, and the Statewide Transportation Improvement Program. Finally, to help ensure fair representation of affected political subdivisions within the geographic area of an RMA, the commission may refuse to authorize the creation of an RMA if the commission determines that the proposed board will not fairly represent political subdivisions in the counties of the RMA that will be affected by the creation of the RMA.

Section 26.14. Commission Action. If the commission approves the creation of an RMA, it will adopt an order. The order will describe the potential candidate project or system of projects to be developed by the RMA and establish the initial size of the RMA's board of directors.

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. Alternative Board Composition and Method of Appointment. Transportation Code, §370.2515, authorizes Harris County and North Texas to agree with the commission on an alternative board composition and method of appointment. Section 26.16 implements Transportation Code, §370.2515, and authorizes the commission to approve an alternative board composition and method of appointment if it determines that the alternative will provide for adequate representation of affected political subdivisions. This requirement is consistent with other provisions of these rules that try to ensure adequate representation of affected political subdivisions.

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

Section 26.21. Addition of Counties. This section allows counties, with the approval of the commission, to join an existing RMA. The commission will approve the addition if the RMA and each member county of the RMA agrees, the commission finds that the addition will benefit the mobility of the region, and the commission finds that affected political subdivisions within the new counties will be adequately represented on the board. 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.

If one of the counties requesting to be added to an RMA is a part of a regional tollway authority or owns or operates a toll project under Transportation Code, Chapter 284, the county may request an alternative board structure and method of appointment. Consistent with §26.16, the commission may approve the request if it determines that the alternative will provide for adequate representation of affected political subdivisions.

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 approve the withdrawal and will do so if it finds that 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 any 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 may approve the dissolution if the RMA has discharged or provided for all debts, obligations, and liabilities, including pending lawsuits, and the RMA has commitments from other governmental entities to assume jurisdiction of all RMA transportation projects. These conditions are necessary to protect the financial viability of projects by ensuring that project financing plans are not adversely affected and to protect 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, and to provide for accountability to the commission and the public, this subsection allows the commission to dissolve an RMA. Involuntary dissolution may be imposed for substantial noncompliance with the rules or with agreements between the department and the RMA. 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. APPROVAL OF A TRANSPORTATION PROJECT

Section 26.31. Request. Transportation Code, §370.187, requires commission approval of an RMA transportation project that will connect to the state highway system or to a department rail facility. Section 26.31 governs the process for approval of such a project.

The section requires the RMA to submit a report identifying relocations or reconstruction to the state highway system or department rail facilities anticipated in connection with the proposed project. This information is needed by the commission to evaluate possible effects on the state highway system. The RMA must also commit to complying with §26.33 concerning design and construction.

Section 26.32. Approval. To help promote the development of an effective and seamless transportation system in the state, the commission, in making its decision to approve the RMA's project, will consider whether the project will be effectively integrated into the state highway system.

Section 26.33. Design and Construction.

Subsection (a). States that this section establishes the requirements for the design and construction of projects undertaken by an RMA that require approval under §26.31 and §26.32.

Subsection (b). This subsection clarifies that RMA turnpike projects that use federal or state funds provided by the department must also comply with the department rules concerning financial assistance for toll facilities.

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

Subsection (d). This subsection describes the design criteria for highways. To protect the public safety, 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 accepted criteria would be beneficial to the project, provisions are included to identify when the RMA may use alternative criteria. The department will allow the use of alternative criteria if it 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 deviate from established criteria for a particular design element on a case-by-case basis. The RMA must determine that the particular criteria could not reasonably be met because of physical, environmental, or other relevant factors and that the proposed design is a prudent 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 (e). This subsection requires RMA rail facilities to be developed in compliance with American Railway Engineering and Maintenance of Way Association standards.

Subsection (f). To ensure compliance with federal law, this subsection provides that for proposed projects that will change the access control line to an interstate highway, the RMA shall submit to the department all data necessary for the department to request Federal Highway Administration approval.

Subsection (g). 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's transportation 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 (h). This subsection applies to the segment of an RMA project that connects to a department facility, such as an interchange. The subsection describes the department's review of an RMA's design and construction. As part of the department’s oversight of projects developed by an RMA, the department must ensure that any connection to a state highway or a department rail 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.

A design schematic depicting plan, profile, and superelevation 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.

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. Hydraulic studies and drainage area maps will enable department review of drainage throughout the project.

Submission of a signing schematic 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.

The subsection describes the requirements for department approval of the final plans and contract administration procedures. 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.

To ensure that an RMA does not rely on insufficient design criteria or inadequate traffic control, the 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. This requirement does not apply to a project developed under a comprehensive development agreement.

The subsection ensures that contract revisions related to the connections to the department facility will comply with applicable design criteria and requires the RMA to submit major contract revisions to the department.

The 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 connections to department facilities. These plans are often needed by the department for future reference for a variety of purposes.

The 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.

The subsection affirms the responsibility of the RMA to comply with all applicable laws with regard to its projects.

To protect the safety of the traveling public, the 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 26.34. 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. To help ensure the expeditious development of a project, the agreement will include timelines governing approvals of the executive director under this subchapter.

Section 26.35. RMA Project on State Highway System. This section allows an RMA to request the commission to designate an RMA highway project as a state highway. Since the commission has statutory responsibility for the operation of the state highway system, this section allows the department to establish design, construction, maintenance, and operation standards, and allows the department to review and approve work done by the RMA on the project.

SUBCHAPTER E. CONVERSION AND TRANSFER OF TXDOT FACILITY

Section 26.41. Request. The section provides that an RMA may request the commission to convert a non-tolled segment of the state highway system to a turnpike project and transfer that segment to the RMA; transfer an existing turnpike project that is part of the state highway system to the RMA; or transfer a department owned and operated ferry to an RMA. The request must include information necessary to assist the commission in evaluating the proposal.

Section 26.42. 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, the department will hold one or more public hearings in each county in which the project is located, solicit written comments, and hold one or more informal public meetings. Notice of the meetings and hearings will be published in the Texas Register and a newspaper in each county in which the facility is located, and posted on the department's and RMA's website. The commission believes that public input is particularly crucial before a highway is converted into a toll facility.

Section 26.43. Approval. This section sets out the conditions under which the commission, after considering public input concerning the proposed transfer, may approve a transfer under this subchapter. First, 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. Second, the RMA must assume all liability and responsibility for compliance with federal laws, regulations, and policies applicable to the project. Third, 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. Fourth, the RMA must agree to assume all liability and responsibility for complying with environmental requirements. This provision will help ensure that the federal government does not hold the state responsible for RMA commitments. Fifth, the commission must determine that the public has a reasonable alternative route on non-toll roads. This provision is required by the RMA statute. The commission will consider impacts on residential neighborhoods and the length of the alternative route. Sixth, the RMA must have adopted its statutorily required rules providing criteria and guidelines for approval of the transfer. Finally, as required by the RMA statute, the governor must approve a transfer.

Section 26.44. Preliminary Approval. This section provides that the commission may grant preliminary approval of a transfer, with final approval conditioned on the completion of preliminary studies necessary for the commission to make the finding required by §26.43. This provision gives the commission the flexibility to begin the transfer process while withholding its final judgment until it has all necessary information. This section also authorizes the commission to pay for all or a portion of the preliminary studies.

Section 26.45. Reimbursement. This section complies with the RMA statute by requiring an RMA to reimburse the department the cost of the transferred project unless the commission determines that the transfer will result in a substantial net benefit to the state, the department, and the traveling public that equals or exceeds the costs. The method of computing the cost is set out as required by the RMA statute.

Section 26.46. Use of Surplus Revenue. To ensure sufficient benefit to the state highway system, the commission may, as a condition to the transfer, require that some expenditures of surplus revenue derived from the project be made to implement projects approved in the metropolitan transportation plan or the unified transportation program. The amount of these expenditures will be identified at the time of transfer, and will be mutually agreed upon.

Section 26.47. Applicability. As provided in the RMA statute, this section prohibits the commission from transferring a ferry located in a city with a population of 5,000 or less without the approval of that city's city council.

Comment: Many individuals requested a clarification of the term "county" throughout the rules. They requested that when referring to sections of roadway being converted from non-toll to toll, "county" refer only to the counties in which that section of roadway resides.

Response: The department disagrees with this comment. The department believes that it is clear that the term refers only to the counties in which the converted segment of roadway resides.

SUBCHAPTER F. MISCELLANEOUS OPERATION PROVISIONS

Section 26.51. Conflict of Interest. Subsection (a) establishes standards of conduct for RMA directors and employees. This language is the same as found in Transportation Code, §370.252, except that a director or employee may not make personal investments, including investments of a spouse, that could reasonably be expected to create a conflict between the director's or employee's private interest and the interest of the RMA or that could impair the ability of the individual to make independent decisions. Subsection (b) sets forth eligibility requirements for RMA directors and chief administrative officers (CAO). The requirements are the same as those found in Transportation Code, §370.252, except that the statutory language addresses conflicts between the RMA directors and CAO and department activities. This subsection extends the requirements to conflicts with RMA and member county activities. The requirements are consistent with common law and the state's statutory conflict of interest requirements, and are intended to prevent conflicts of interests, whether real or perceived. The subsection allows the commission to approve an exception to the requirements in limited circumstances that will still ensure compliance with law and the protection of the public trust.

Section 26.52. 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, and is used for specific purposes legally supported and authorized by the donor.

Section 26.53. Surplus Revenue. The RMA statute requires an RMA to use surplus revenue from transportation 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. The RMA statute further 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 maintenance and operation of the project.

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 26.54. Project Operating Agreement. To facilitate the effective maintenance and operation of an RMA project, this section authorizes the RMA and the department to enter into a project operating agreement.

Section 26.55. Contracts with Mexico. The RMA statute requires the commission to adopt rules governing the authority of an RMA to contract with Mexico. To help protect public resources and ensure that the contract with Mexico will provide a public purpose, this section requires the RMA to submit: (1) a summary of the purpose of the agreement; (2) a list of the duties and responsibilities to be performed by each party to the contract; (3) a description of any federal, state, or local funds to be spent in Mexico; and (4) a description of any work to be done by RMA employees or contractors within Mexico. This information will assist the commission in determining whether the contract will provide a significant benefit to the state.

SUBCHAPTER G. REPORTS AND AUDITS

Sections 26.61-26.64. 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, §§26.61-26.64 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.

COMMENTS

On November 25, 2003, a public hearing was held to receive comments, views, or testimony concerning the proposed repeals and new sections.

Comments were received on the proposed repeals and new sections. The Capital Area Transportation Coalition and the Central Texas Regional Mobility Authority submitted comments in support of the rules.

General Comments

Comment: One individual asserted that the rules are calculated to give the department full, ultimate control over the nature and design of the roads, while shielding the department from full responsibility that the department has had in the past in certain areas. He further asserted that the department is trying to control the process but escape certain responsibilities. He stated that those responsibilities ought to be added back into the process.

Response: The department disagrees. An RMA is an independent political subdivision, with full ownership of and responsibility for its facilities. The legislature directed the commission to adopt rules governing the design and construction of certain transportation projects. The legislature directed the commission to adopt rules governing certain other aspects of an RMA's operations. These rules are calculated to comply with the legislature's mandate, protect the safety of the traveling public, and help ensure the smooth implementation of the new law.

Comment: Save Our Springs Alliance (SOS) expressed concern that the rules would have the department approve creation of RMAs, and continue having substantial oversight of RMAs, but at the same time seek to insulate the department from responsibility for compliance with all local, state, and federal environmental protection laws. SOS argued that RMAs do not have significant, if any, environmental expertise nor do they have the resources to adequately investigate environmental issues, evaluate alternatives, and engage the public in assisting such investigations and evaluations. Similarly, an individual commenter argued that turning over the responsibility for following environmental law to the RMA is a bad policy. He asserted that it should be kept as a function of the department.

Response: The department agrees that the rules do seek to insulate the department from liability and to emphasize to the RMAs and the public the responsibility that RMAs have for their projects. The department feels compelled to do so to protect the taxpayers of the state. An RMA project is owned and operated by the RMA, an independent political subdivision. It would be neither prudent stewardship of state resources nor within our authority to agree to share responsibility. More specifically, the legislature, through Transportation Code, §370.188, gave specific direction and responsibility to RMAs for conducting environmental reviews. It would be contrary to legislative intent and to the basic principal of local control upon which the concept of RMAs was founded for the department to regulate and share responsibility for environmental reviews. As always, the department is available, when requested, to advise and assist other governmental entities in the development of their transportation projects.

Comment: SOS asserted that the overall scheme of RMA funding through the issuance of bonds is not fiscally sound.

Response: The legislature granted RMAs the power to issue debt.

Comment: The Texas Association of Counties argued that the proposed rules are ambiguous regarding the authority of a county that does not belong to an RMA to review and approve RMA projects proposed within the affected county.

Response: The department disagrees with this comment. The RMA statute authorizes an RMA to operate in a non-member county under certain circumstances, and prescribes the responsibilities of the RMA and the affected county when an RMA does so. The commission sees no need to regulate in this area, and generally lacks the authority to do so.

Section 26.11. Petition.

Comment: A county's petition for the approval of an RMA must include a resolution from the commissioner's court. The Texas Association of Counties argued that the resolution should be "an adopted resolution."

Response: The department agrees with this clarification. Section 26.11 is amended to require an adopted resolution.

Section 26.13. Approval.

Department Initiated Revision: The commission may not approve the creation of an RMA unless the RMAs potential candidate project comes from a conforming transportation plan and transportation improvement program, if the project is located in a nonattainment area. The department identified a concern with this requirement. It may be too early in a project's development for an RMA to feasibly comply with this requirement. The section is revised to remove the requirement.

Section 26.16. Alternative Board Composition and Method of Appointment.

Comment: The section authorizes the commission to approve a proposed alternative board composition and method of appointment in limited circumstances. The rule requires written support from the commissioners court of each county in the RMA. The Texas Association of Counties argued that the support should be indicated by an adopted resolution from the commissioners court and that the resolution should indicate the court's approval of the alternative board structure and method of appointment.

Response: The department agrees that this revision will clarify what is needed from the counties, and §26.16 is revised as suggested.

Section 26.21. Addition of Counties.

Comment: Section 26.21 prescribes the conditions under which the commission would approve the addition of a county to an existing RMA. Travis County proposed adding a requirement that the originating RMA county commissioners courts agree in writing to the addition. Mopac Boulevard Alliance (MBA) and Just Transportation Alliances (JTA) proposed requiring the approval of all of the existing member counties.

Response: The department agrees with MBA and JTA. When a county commissioners court agrees to join an RMA, the county takes into consideration the current membership of the RMA and the composition of the RMA's board. It would be unfair to substantively change the makeup of the RMA and its board without the approval of each member county. The section is revised to require the approval of each member county.

Comment: The section authorizes the commission to approve a proposed alternative board composition and method of appointment if one of the additional counties is part of a regional tollway authority or owns or operates a toll project under Transportation Code, Chapter 284. The section requires written support from the commissioners court of each county in the RMA. The Texas Association of Counties argued that the support should be indicated by an adopted resolution from the commissioners court and that the resolution should indicate the commissioners court's approval of the alternative board structure and method of appointment.

Response: The department agrees that this revision will clarify what is needed from the counties, and §26.21 is revised as suggested.

Section 26.31. Request.

Comment: Many individuals asked the department to revise this section or §26.32 to require an RMA to submit project information concerning social, economic, and environmental impact and known opponents.

Response: The department agrees that the commission should be provided this type of information. The department, however, believes that this information will be more complete and more readily available in the final environmental document. Section 26.31 is revised to require the RMA to submit a copy of any report, study, or analysis prepared pursuant to the federal National Environmental Policy Act or Transportation Code, §370.188.

Comment: Section 26.31 describes how an RMA may request commission approval of a transportation project that will connect to the state highway system or to a department rail facility. Several individuals suggested amending the section to require city and county approval of the project and one individual suggested amending the section to require a finding of significant public support.

Response: The department disagrees with these comments. The commission was given the responsibility to approve certain RMA projects. While public input is important, the commission must also consider its responsibility to provide a transportation system that meets the needs of Texas.

Section 26.32. Approval.

Comment: One individual suggested using the public involvement language in proposed §27.72 in §26.32 to ensure consistency.

Response: The department disagrees with this comment. The RMA is required by state law to solicit public input on its projects. The department does not see a need to duplicate that process. The department will be provided a copy of the environmental study.

Subchapter E. Conversion and Transfer of TxDOT Facility.

Comment: The mayor of the City of Laredo recognized that toll roads, if properly planned, will help meet some of the transportation needs in Texas, but expressed her adamant opposition to the idea of shifting public funds from existing projects to toll roads. The mayor asserts that toll projects should not be pursued unless they will generate sufficient revenues to pay for themselves and should be considered only if they will provide an added benefit to drivers over existing highways. The mayor also asserts that by converting existing "freeways" into toll roads, the state would be double dipping into people's pockets. Texans should not be forced to pay for highway infrastructure when they fuel their cars and again each time they access the highway network. A number of other persons made similar comments concerning the conversion to toll roads of existing non-toll roads financed with tax dollars, asserting that it was paying for a road twice. Some indicated that they were not opposed to developing newly constructed roads or additional capacity as toll roads or toll lanes. Others opposed conversions to toll roads because of the detrimental effects on neighborhoods resulting from traffic not wanting to use the toll roads or congested feeder roads cutting through those neighborhoods, because of the economic impact on local businesses, the delays sitting in line at toll booths, and because of the assertion that toll roads discriminate against the lower income sector of society that cannot afford to pay the tolls. Several persons commented that instead of imposing tolls, the gasoline tax should be raised.

Response: The department agrees that toll roads will help meet transportation needs in Texas, but does not agree with the proposition that toll projects not be pursued unless they will generate sufficient revenues to pay for themselves, or with the proposition that, in appropriate cases, existing non-toll roads should not be converted to toll roads. With limited state transportation funding and the state experiencing significant increases in population and vehicle miles traveled, the "pay as you go" method of financing highway projects is not able to keep pace with the growing transportation demand. Additionally, many of the needed projects, if tolled, will not pay for themselves without some state transportation funding. Recognizing this dilemma, in 2001 the Texas Legislature enacted and the voters approved a constitutional amendment authorizing the department to use state and federal transportation funds to pay the costs of toll facilities. The use of tax funds means that the toll rate will be lower than if tolls and toll revenue bonds alone were used to fund the project. Moreover, the use of tolls means that fewer tax dollars are needed for a particular project, stretching the limited state transportation funding. Toll financing helps to preserve state and federal transportation funds for other priority projects. Additionally, by leveraging toll revenues to provide accelerated funding, toll projects are completed more quickly, resulting in lower overall construction costs and transportation facilities that are available to the public sooner. This new capacity enables users of the toll facility to reduce the losses of time and productivity incurred when traveling on existing non-toll facilities, resulting in more convenience, safety, and a higher level of service on all facilities. Motorists using the toll facility reduce congestion on the non-toll facilities, providing improved air quality and enhanced mobility. Regarding the asserted detrimental effects of converting non-toll roads to toll roads, §26.43 as adopted provides that the commission will not approve a proposed transfer unless the commission determines that the public has a reasonable alternative route on non-toll roads. The commission will consider impacts on residential neighborhoods and the length of the alternative route when considering whether an alternative route is reasonable. The department understands that no one likes waiting in line to pay a toll. Electronic toll collection technology is being utilized on many new toll facilities, and will be utilized on department turnpike projects. Express electronic toll collection lanes allow the customer to go through toll plazas at prevailing highway speed while paying electronically. The department finally notes that the decision to raise the gasoline tax is one committed to the legislature, and over which the department and the commission have no control.

Comment: Zachry Construction Corporation asked the commission to define when in the development and construction process of the state highway system a segment of road is deemed to be a turnpike project. Zachry argued that "Such a ruling has significance in that it would allow TxDOT, the public, other affected public entities and the private sector to know at what point in the process the rules regarding a conversion would apply to a particular segment of road." The executive director of the San Antonio Mobility Coalition asked a similar question concerning the commission's other proposed toll conversion rules. He asked the commission to put in the definitions what is exactly a non-toll segment of state highway. He asked the following questions: Does it begin when the line is drawn on the map? Does it begin before, or during the environmental process? Does it begin after the record of decision is issued? Is it after construction begins? He asserted that it would be helpful for the public and elected officials who will be dealing with this so they clearly understand when the toll conversion process begins.

Response: The commission has the statutory ability to designate a segment of road as a turnpike project at any time in its development. To commit to designating a segment at a particular time in all cases would unduly limit the commission's flexibility to react to individual circumstances. Neither does the commission wish to define a non-tolled segment. Toll conversion is a relatively new concept with significant implications for the future of transportation in the state. The commission does not feel that it would be prudent, at this time, to define the specific circumstances to which the toll conversion rules would apply. The different circumstances are infinite. The concept is in its infancy. The rules do apply to a segment of non-tolled highway that is currently open to traffic if the department proposes to toll one or more lanes of that facility so that the public has fewer non-tolled lanes than it did prior to conversion. The commission will defer analysis of other types of circumstances.

Comment: Several individuals asked that the department clarify the terms "section/segment" throughout the RMA rules and in other rules the commission has proposed concerning toll conversion and transfer and county documents. They asked that the terms be limited when referring to sections of roadway being converted from non-toll to toll to avoid these types of conversions from being lumped into larger projects. They asserted that this revision would allow for any conversion of non-toll roadway to toll roadway to have its own approval process as well as determine how the funding raised from these tolls would be spent.

Response: The department disagrees with this comment. The RMA toll conversion rules consistently use the term "segment," which is the term used in the governing statute. The statute and the rules do not allow the commission to lump different segments of roadway into larger projects.

Comment: Save Our Springs Alliance (SOS) commented that the conversion rules appear to segment the analysis of the question of whether converting an existing segment of road to a toll road is in the public interest apart from the analysis of whether the expansion, improvements, or extension of the road segment that would be funded by the converted toll section is in the public interest. SOS argued that these questions should be combined so that the public can understand and meaningfully participate in the decision making process of converting existing road segments to tolls and where and how the proposed collected toll will be spent.

Response: The legislature itself split the two questions by requiring a public hearing on the question of the conversion. SOS provided no specific suggestions on how to combine the two questions. The rules do combine the questions to a degree by allowing the commission to delay final approval until environmental and other preliminary studies are completed, by holding at least one more hearing after the completion of those studies, and by making all pertinent studies available to the public. Also, in most circumstances the department will be providing for public comment on the conversion and project improvements through a reevaluation of the environmental impact statement.

Section 26.41. Request.

Comment: MBA and JTA request that the RMA proposal be submitted in writing and be available, along with studies, on computer disk.

Response: The department agrees that §26.41 should be clarified to require the RMA to submit its request in writing. The department disagrees that the request and studies should be submitted on computer disk. Such a requirement may be neither necessary nor helpful. See later responses concerning internet availability.

Comment: MBA and JTA suggested requiring RMAs to explain how the request complies with the factors to be considered by the commission in §26.43.

Response: The department agrees with this comment, except the department does not see any benefit to be derived from requiring information concerning all of the factors. Many of them will not merit explanation. Section 26.41 is revised to require an RMA to explain: how the proposed transfer is an integral part of the region's overall plan to improve mobility in the region; how the transfer is in the public interest; and how the public has a reasonable alternative. These factors involve subjective commission discretion and the commission may benefit from explanation.

Comment: MBA and JTA suggested requiring the RMA to submit copies of any studies in support of the request.

Response: The department agrees with this suggestion. The studies may be helpful to the commission and it would not burden the RMA to provide copies. Section 26.41 is revised to require copies of studies.

Comment: MBA, JTA, and many individuals suggested requiring an RMA to provide information on known opponents and controversies.

Response: The department agrees that this information will assist the commission in determining the degree of public support. Section 26.41 is revised to require this information.

Comment: Many individuals suggested requiring an RMA to submit information concerning impacts on neighborhoods, etc.

Response: The department agrees that this information will be helpful to the commission, but does not wish to require an RMA to conduct a new study that would burden the resources of an RMA. Section 26.41 is revised to require an RMA to provide a brief description of any known environmental, social, economic, or cultural resource issues, such as impacts on wetlands and other water resources, endangered species, parks, neighborhoods, businesses, historic buildings or bridges, and archeological sites concerning the transfer.

The commission is of the opinion that by requiring an RMA to submit the information - studies, impacts, explanations - it is not placing a significant burden on an RMA. The new requirements merely request information that can be provided with minimal cost and will assist the commission in evaluating the request.

Section 26.42. Public Involvement.

Comment: MBA and JTA submitted several suggestions to improve notice of the public hearing for a proposed conversion. They suggested that the rules require: mailing a notice of public hearings to groups and individuals included in the RMA request as known to be opposed to the project; posting notice of the hearings on signs on the existing road that is proposed to become a tolled facility; posting notice on the website of the department and the RMA with links to the RMA's request and any studies submitted to the commission supporting the request; maintaining a mailing list of interested persons who request notice of public hearings on the request and providing those individuals notice; the notice to inform the public that the written request and any studies in support of the request on the websites of the commission and the RMA; two-week notice of the hearings.

Response: The department disagrees with the following suggestions for the reasons stated. Committing by rule to mail notice to groups and individuals included in the RMA request as known to be opposed to the project and to maintaining a list of interested persons for the purpose of providing personal notice adds a burdensome ministerial duty that, if not followed, could result in a legal challenge. Posting notice of hearings on signs on major highways would be contrary to public safety.

The department agrees with the following suggestions for the reasons stated. Posting notice on websites with links to the request and studies submitted will be helpful and informative for the public. The department will commit to providing links to studies only to the extent practicable since the studies may be too large to make feasible electronic availability. The notice will inform the public that the request and studies are available at the department for review and can be found, if practicable, on the websites of the commission and the RMA. The commenters suggested a two-week notice. The department substantially agrees with this comment, but will require a tenday notice. The department has traditionally required a minimum ten-day notice for rule hearings and has found this policy to be sufficient.

Comment: Several individuals suggested requiring the department to publish a schedule of dates and deadlines.

Response: The department disagrees. The department will publish public hearing dates and a deadline for the receipt of written public comments. The department itself typically will not have a timeline for completing the process so that the process will be flexible enough to properly allow for the receipt and analysis of public comment.

Comments: Several individuals suggested making the following revisions concerning the public input process: require more than one hearing; conduct the hearings in the area of the affected non-toll segment; publish a list of the individuals responsible for the approval of any conversion; and clearly define the individual or group who will be evaluating the public response to ensure that public feedback is being given adequate consideration in the approval process. The Texas Association of Counties suggested holding a hearing in each county in which the project is located and publishing notice in each of those counties.

Response: The department does not wish to commit to holding more than one public hearing in all cases. The need for additional hearings should be evaluated on a case by case basis. The department does not wish to commit to holding hearings in the area of the highway segment. Although the department may typically hold a hearing in the project area, in some circumstances it may not be feasible or beneficial to obtain a suitable hearing facility in the project area. In response to the issues raised by these comments, the department will revise the section to require, in addition to a hearing, one or more public meetings. Public meetings are more informal gatherings that allow an opportunity for the department to provide project information to the public while receiving more informal public input. The department will hold public meetings in the area of the highway segment if practicable. Section 26.42 is also revised to require a hearing in each county in which the project is located. Notice of the hearing will be published in each of those counties.

The department does not agree to publishing a list of individuals responsible for the approval of a conversion. The commission is solely responsible for approval. The department will also not define the individual or group who will be evaluating the public response. Various individual employees of the department may provide information to commissioners. This is purely an internal management concern, and the commission is ultimately responsible for evaluating public response.

Comment: One individual suggested using the public involvement language in proposed §27.72 in §26.42 to ensure consistency.

Response: The department agrees with this comment to a degree. It is not necessary that each rule match precisely; however, while implementing other revisions discussed in this preamble, the language of the two sections was made more consistent.

Section 26.43. Approval.

Comment: Travis County and an individual proposed requiring that the commission determine, prior to approving the transfer and conversion of a department facility, that the governing body of each affected county and city supports the conversion and that there is significant public support for the conversion. The county points out that these finding were required by the repealed rules.

Response: The department disagrees with this proposal. The section does require the commission to consider public support. Requiring a finding of significant public support and a consensus among local governments would unduly restrict the ability of the commission to fulfill its statutory responsibility to make the decision whether to convert the facility or not.

Comment: The section requires the commission to determine that the public has a reasonable alternative route on non-toll roads prior to approving a conversion of a highway. MBA and JTA argue that the reasonable alternative should not send traffic through neighborhoods or require significantly longer distance trips. They suggested adding language to that effect. Several individuals argued that the term "reasonable alternative route on toll roads" should be precisely defined. They stated that, at the very least, it needs to be clear on how out-of-the-way a non-toll option will be and whether or not it can include neighborhood routes. They further argued that the alternative must not include neighborhood routes (which should be defined), "as somehow neighborhood roadways do not equate to subsections of a state highway."

Response: The department disagrees with requiring an affirmative finding that the alternative does not send traffic through neighborhoods or require significantly longer distance trips. These conditions are too subjective and would therefore neither benefit the commission nor the public by their inclusion. The department also does not desire to provide a precise definition of reasonable alternative route. The department does not believe that a precise definition would be useful for the infinite number of circumstances that would arise for each proposed transfer and conversion. The department does agree, however, that these issues are important and should be considered by the commission. Section 26.43 is amended to require the commission, when determining whether there is a reasonable alternative route, to consider the impact on neighborhoods and the distance of the alternative route.

Comment: MBA and JTA suggested that the numbering/lettering of the subsections is incorrect.

Response: The department disagrees. The section as proposed had what the Texas Register refers to as an "implied (a)."

Comment: The Texas Association of Counties argued that the rules should clarify that an RMA may not operate in a non-RMA county, or transfer or convert a state highway within a non-RMA county to an RMA, without the express consent of the affected county, evidenced by an adopted resolution.

Response: The department disagrees with this comment. The RMA statute prescribed the conditions under which an RMA may operate in a non-member county. It is not necessary for the commission to regulate in this area.

Section 26.44. Preliminary Approval.

Comment: Several individuals asked the department to "define how public hearings/public input are affected when preliminary approval is given for the conversion of non-toll roads to toll roads."

Response: The department is unsure of the intent of this comment. The rules give the commission the ability to delay final approval of a proposed conversion if the commission decides that preliminary studies should first be completed. If the commission opts for a two-step approval process, the department will comply with the public input requirements prior to preliminary approval and again prior to the commission considering final approval. Subsection (c) of §26.44 is revised to clarify that the public input process prior to final approval will be the same as the public input process prior to preliminary approval.

Section 26.46. Use of Surplus Revenue.

Comment: Several individuals argued that any surplus revenues generated by the conversion of a non-toll section should not be subject to the same rules as surplus revenues generated by new RMA toll roads. They argued that revenues generated by the conversion of non-toll roadways for RMAs should be treated the same as revenue generated by the conversion of non-toll segments of the state highway system to either a department turnpike or a county toll road. They argued that without such a restriction, there is very little to prevent RMAs from converting existing segments of tax-funded roadways into toll roads simply to finance new toll roads in different areas of the RMA.

Response: The department disagrees with this comment. The legislature limited the expenditure of revenue generated from converted highways if the converted highway is owned and operated by the department or a county. The legislature chose to not limit the expenditure of such revenue derived from a converted highway owned and operated by an RMA. To place significant restrictions on RMAs in this matter would be contrary to legislative intent and would limit the ability of an RMA to meet the transportation needs of the region it is intended to serve.

Section 26.51. Conflict of Interest.

Comment: Section 26.51(a)(4) provides that an RMA director or employee may not "make personal investments that could reasonably be expected to create a substantial conflict between the director's or employee's private interest and the interest of the RMA." MBA and JTA suggested removing the word "substantial," adding the following phrase, "or that could impair the ability of the individual to make independent decisions," and applying the paragraph to investments of spouses.

Response: The department agrees with the three suggested revisions. Section 26.51 is revised to reflect these suggestions. The commission wants to ensure public confidence in the leadership of the public's transportation agencies. Extending some of the conflict of interest requirements to spouses is consistent with similar statutory provisions concerning transportation commissioners.

Comment: Transportation Code, §362.0041 authorizes the department to convert a state highway to a department turnpike project. That section restricts the expenditure of revenue collected from the converted highway. The revenue may only be expended on the improvement, extension, expansion, or operation of the converted segment. Zachry asked for clarification of the following issue: If a highway is converted under §362.0041 and later transferred to an RMA under Subchapter E of the proposed rules, would the restrictions on expenditures under §362.0041 apply to the RMA's operation of the transferred highway.

Response: This is a question of legislative interpretation that the department will consider if these circumstances ever arise.

Subchapter A. GENERAL PROVISIONS

The Texas Department of Transportation (department) adopts the repeal of §§27.11-27.20, concerning the Texas Turnpike Authority, and adopts new §§27.11-27.14, concerning the transfer of department turnpike projects and the conversion of non-toll state highways. Sections 27.12-27.14 are adopted with changes to the proposed text as published in the November 14, 2003, issue of the Texas Register (28 TexReg 10190). The repeal of §§27.11-27.20 and new §27.11 are adopted without changes to the proposed text and will not be republished.

EXPLANATION OF ADOPTED REPEALS AND NEW SECTIONS

House Bill 3588, 78th Legislature, Regular Session, 2003, amended Transportation Code, Chapters 361 and 362, to clarify the powers of the Texas Transportation Commission (commission) and the department with regard to the financing, construction, improvement, maintenance, and operation of turnpike projects, and to provide additional powers to the commission and the department that are necessary or convenient to the financing, construction, improvement, maintenance, and operation of turnpike projects. The chapters contained obsolete references to the former board of the Texas Turnpike Authority or to the Texas Turnpike Authority as an independent entity, and contained numerous provisions that duplicate the substance of other statutes applicable to the department.

Rules contained in existing §§27.11-27.20 were adopted when the Texas Turnpike Authority Division of the department had an independent board and was an independent entity. These sections are repealed since they are now obsolete and duplicate other department rules.

House Bill 3588 amended provisions in the Transportation Code concerning the transfer of department turnpike projects to certain governmental entities and the conversion of non-toll segments of the state highway system to department turnpike projects. Transportation Code, §361.282, authorizes the department to lease, sell, or otherwise convey all, or any portion of, a turnpike project to certain entities if the commission and the governor approve the transfer of the project as being in the best interests of the state and the entity receiving the turnpike project. Transportation Code, §362.0041, provides that if the commission determines the conversion of a non-toll segment of the state highway system to a toll facility will improve overall mobility in the region or is the most feasible and economic means to accomplish necessary expansion, improvements, or extensions to that segment of the state highway system, the segment may be converted to a department turnpike project by order of the commission. New §§27.11-27.14 are adopted to implement the legislative changes.

SECTION BY SECTION ANALYSIS

Section 27.11 describes the purpose of the subchapter, which is to prescribe policies and procedures governing commission approval of the transfer of a turnpike project or the conversion of a non-toll segment of the state highway system to a turnpike project.

Section 27.12 defines words and terms used in the subchapter.

Section 27.13 clarifies that the department may exercise the authority to lease, sell, or otherwise convey all, or any portion of, a turnpike project to certain entities if the commission and the governor approve the transfer of the project as being in the best interests of the state and the entity receiving the turnpike project, and provides that the receiving entity must agree to reimburse the department for any expenditures of the department for the construction, operation, and maintenance of the project that have not been reimbursed with the proceeds of bonds issued by the commission for the project, unless the commission finds that the transfer will result in substantial net benefits to the state, the department, and the public that equal or exceed the amount of the repayment waived.

Section 27.14 provides that if the commission determines that the conversion of a non-toll segment of the state highway system to a toll facility will improve overall mobility in the region or is the most feasible and economic means to accomplish necessary expansion, improvements, or extensions to that segment of the state highway system, the segment may be converted to a department turnpike project by order of the commission.

Section 27.14(c) sets out the conditions under which the commission may, after considering public input concerning the proposed conversion, approve a conversion under this section. As required by Transportation Code, §362.0041, the commissioners court of each county in which the highway is located must approve the proposed conversion.

Section 27.14(d) provides that the commission may grant preliminary approval of a conversion, with final approval conditioned on the completion of preliminary studies necessary for the commission to make the findings required by §27.14(c). This provision gives the commission the flexibility to begin the conversion process while withholding its final judgment until it has all necessary information. As required by Transportation Code, §362.0041, §27.14(f) provides that toll revenue collected from the operation of a converted segment of highway may only be used to finance the improvement, extension, expansion, or operation of the converted segment of highway.

COMMENTS

On November 26, 2003, a public hearing was held to receive comments, views, or testimony concerning the proposed repeals and new sections. The department received numerous written comments.

Section 27.12, Definitions.

Comment: The term "turnpike project" is defined as "a project of the Texas Department of Transportation, as defined by Transportation Code, Chapter 361." The North Texas Tollway Authority suggested adding the word "turnpike" before "project."

Response: The department agrees with this clarification. The section is revised accordingly.

Section 27.13, Transfer of Turnpike Projects.

This section authorizes the department to lease, sell, or otherwise convey a turnpike project to certain entities.

Comment: Mopac Boulevard Alliance (MBA) and Just Transportation Alliances (JTA) asked that an entity's request for a transfer be submitted in writing (including on computer disk), show compliance with each factor in "Section 27.14," include any studies, and inform the commission of individuals and organizations opposed to the transfer.

Response: In their comments, MBA and JTA clearly confused this section, which only concerns a transfer of a turnpike, with §27.14, which concerns the conversion of a non-tolled state highway to a department turnpike. The department will not add these requirements to §27.13 since it only involves a transfer of a turnpike. Such a transfer does not involve the much more complicated and potential controversial issues of a toll conversion. The department will also not add these requirements to §27.14 concerning conversion since the requirements speak to a request coming from an outside entity. The department will make any studies available (see comment/response for §27.14) and the order approving a conversion under §27.14 will address all findings the commission is required to make under that section.

Comment: Subsection (d) of §27.13 provides that the receiving entity must "agree to reimburse the department for any expenditures of the department for the construction, operation, and maintenance of the transferred project that have not been reimbursed with the proceeds of the bonds issued by the commission for the project, unless the commission finds that the transfer will result in substantial net benefits to the state, the department, and the public that equal or exceed the amount of the repayment waived." This language is statutory. The subsection continues to add more specific language governing the amount to be repayed and the costs to be deducted. Zachry and the North Texas Tollway Authority argued that the more specific language governing the deduction is too restrictive.

Response: The department agrees with the comments and also feels that the more specific language governing the determination of the cost of the department to originally construct the project is not necessary. The commission needs the flexibility to respond to the individual circumstances of each proposed transfer. The subsection is revised to include only the statutory language previously quoted.

Section 27.14, Conversion of Non-toll State Highways.

The department received numerous written comments on §27.14. This section provides that the commission may convert a segment of the state highway system to a department turnpike project. This concept is often referred to as toll conversion.

Comment: A number of individuals submitted comments concerning the conversion to toll roads of existing non-toll roads financed with tax dollars, asserting that it was paying for a road twice. Some indicated that they were not opposed to developing newly constructed roads or additional capacity as toll roads or toll lanes. Others opposed conversions to toll roads because of the detrimental effects on neighborhoods resulting from traffic not wanting to use the toll roads or congested feeder roads cutting through those neighborhoods, because of the economic impact on local businesses, the delays sitting in line at toll booths, and because of the assertion that toll roads discriminate against the lower income sector of society that cannot afford to pay the tolls. Several persons commented that instead of imposing tolls, the gasoline tax should be raised.

Response: The department agrees that toll roads will help meet transportation needs in Texas, but does not agree with the proposition that toll projects not be pursued unless they will generate sufficient revenues to pay for themselves, or with the proposition that, in appropriate cases, existing non-toll roads should not be converted to toll roads. With limited state transportation funding and the state experiencing significant increases in population and vehicle miles traveled, the "pay as you go" method of financing highway projects is not able to keep pace with the growing transportation demand. Additionally, many of the needed projects, if tolled, will not pay for themselves without some state transportation funding. The use of tax funds means that the toll rate will be lower than if tolls and toll revenue bonds alone were used to fund the project. Moreover, the use of tolls means that fewer tax dollars are needed for a particular project, stretching the limited state transportation funding. Toll financing helps to preserve state and federal transportation funds for other priority projects. Additionally, by leveraging toll revenues to provide accelerated funding, toll projects are completed more quickly, resulting in lower overall construction costs and transportation facilities that are available to the public sooner. This new capacity enables users of the toll facility to reduce the losses of time and productivity incurred when traveling on existing non-toll facilities, resulting in more convenience, safety, and a higher level of service on all facilities. Motorists using the toll facility reduce congestion on the non-toll facilities, providing improved air quality and enhanced mobility. Regarding the asserted detrimental effects of converting non-toll roads to toll roads, §27.14(c) as adopted provides that the commission will consider whether the public has a reasonable alternative route on non-toll roads. The commission will consider impacts on residential neighborhoods and the length of the alternative route when considering whether an alternative route is reasonable. The department understands that no one likes waiting in line to pay a toll. Electronic toll collection technology is being utilized on many new toll facilities, and will be utilized on department turnpike projects. Express electronic toll collection lanes allow the customer to go through toll plazas at prevailing highway speed while paying electronically. The department finally notes that the decision to raise the gasoline tax is one committed to the legislature, and over which the department and the commission have no control.

Comment: Zachry Construction Corporation asked the commission to define when in the development and construction process of the state highway system a segment of road is deemed to be a turnpike project. Zachry argued that "Such a ruling has significance in that it would allow TxDOT, the public, other affected public entities and the private sector to know at what point in the process the rules regarding a conversion would apply to a particular segment of road." The executive director of the San Antonio Mobility Coalition asked a similar question. He asked the commission to put in the definitions what exactly a non-toll segment of state highway is. He asked the following questions: Does it begin when the line is drawn on the map? Does it begin before, or during the environmental process? Does it begin after the record of decision is issued? Is it after construction begins? He asserted that it would be helpful for the public and elected officials who will be dealing with this so they clearly understand when the toll conversion process begins.

Response: The commission has the statutory ability to designate a segment of road as a turnpike project at any time in its development. To commit to designating a segment at a particular time in all cases would unduly limit the commission's flexibility to react to individual circumstances. Neither does the commission wish to define a non-tolled segment. Toll conversion is a relatively new concept with significant implications for the future of transportation in the state. The commission does not feel that it would be prudent, at this time, to define the specific circumstances to which the toll conversion rules would apply. The different circumstances are infinite. The concept is in its infancy. The rules do apply to a segment of non-tolled highway that is currently open to traffic if the department proposes to toll one or more lanes of that facility so that the public has fewer non-tolled lanes than it did prior to conversion. The commission will defer analysis of other types of circumstances.

Comment: Several individuals asked that the department clarify the terms "section/segment" throughout the rules and other rules the commission has proposed concerning toll conversion and transfer and county documents. They asked that the terms be limited when referring to sections of roadway being converted from non-toll to toll to avoid these types of conversions from being lumped into larger projects. They asserted that this revision would allow for any conversion of non-toll roadway to toll roadway to have its own approval process as well as determine how the funding raised from these tolls would be spent.

Response: The department disagrees with this comment. This section consistently uses the term "segment," which is the term used in the governing statute. The statute and the rules do not allow the commission to lump different segments of roadway into larger projects.

Comment: Save Our Springs Alliance (SOS) commented that the conversion rules appear to segment the analysis of the question of whether converting an existing segment of road to a toll road is in the public interest apart from the analysis of whether the expansion, improvements, or extension of the road segment that would be funded by the converted toll section is in the public interest. SOS argued that these questions should be combined so that the public can understand and meaningfully participate in the decision making process of converting existing road segments to tolls and where and how the proposed collected toll will be spent.

Response: The legislature itself split the two questions by requiring a public hearing on the question of the conversion. SOS provided no specific suggestions on how to combine the two questions. The rules do combine the questions to a degree by allowing the commission to delay final approval until environmental and other preliminary studies are completed, by holding at least one more hearing after the completion of those studies, and by making all pertinent studies available to the public. Also, in most circumstances the department will be providing for public comment on the conversion and project improvements through a reevaluation of the environmental impact statement.

Section 27.14(a), Purpose.

Comment: MBA, JTA, and many individuals suggested revising the rule to require that the commission be notified of known opponents and controversies and be provided information concerning impacts on neighborhoods, etc.

Response: The department disagrees with this suggestion. The department is regulating itself in this section, and does not feel that it is appropriate to require itself, by rule, to provide this information to the commission. The department, as it does for other commission actions, will provide all pertinent information to the commission.

Section 27.14(b), Public Involvement.

Comment: One individual suggested using the public involvement language in proposed §27.72 in this subsection to ensure consistency.

Response: The department agrees with this comment to a degree. It is not necessary that each rule match precisely; however, while implementing other revisions discussed in this preamble, the language of the two sections was made more consistent.

Comment: MBA and JTA submitted several suggestions to improve notice of the public hearing for a proposed conversion. They suggested that the rules require: mailing a notice of public hearings to groups and individuals included in the request as known to be opposed to the project; posting notice of the hearings on signs on the existing road that is proposed to become a tolled facility; posting notice on the website of the department and the "entity requesting the transfer" with links to the request and any studies submitted to the commission supporting the request; maintaining a mailing list of interested persons who request notice of public hearings on the request and providing those individuals notice; notice to inform the public that the written request and any studies in support of the request are on the websites of the commission and the "entity requesting the transfer;" and two-week notice of the hearings.

Response: The department disagrees with the following suggestions for the reasons stated. Concerning committing by rule to mail notice to groups and individuals included in the request as known to be opposed to the project and to maintaining a list of interested persons for the purpose of providing personal notice: such requirements add a burdensome ministerial duty that, if not followed, could result in a legal challenge, and the department did not agree in a previous response to requiring the commission to be notified of opponents. Posting notice of hearings on signs on major highways would be contrary to public safety.

The department agrees with the following suggestions for the reasons stated. Posting notice on websites with links to studies will be helpful and informative for the public. The department will commit to providing links to studies only to the extent practicable since the studies may be too large to feasibly make available electronically. The notice will inform the public that the request and studies are available at the department for review and can be found, if practicable, on the department's website. The commenters suggested a two-week notice. The department substantially agrees with this comment, but will require a 10-day notice. The department has traditionally required a minimum 10-day notice for rule hearings and has found this policy to be sufficient. The comments referred to the "entity requesting the transfer." Under this section, there is no entity requesting the transfer.

Comment: Several individuals suggested requiring the department to publish a schedule of dates and deadlines.

Response: The department disagrees. The department will publish public hearing dates and a deadline for the receipt of written public comments. The department itself typically will not have a timeline for completing the process so that the process will be flexible enough to properly allow for the receipt and analysis of public comment.

Comments: Several individuals suggested making the following revisions concerning the public input process: require more than one hearing; conduct the hearings in the area of the affected non-toll segment; publish a list of the individuals responsible for the approval of any conversion; and clearly define the individual or group who will be evaluating the public response to ensure that public feedback is being given adequate consideration in the approval process.

Response: The department does not wish to commit to holding more than one public hearing in all cases. The need for additional hearings should be evaluated on a case by case basis. The department does not wish to commit to holding hearings in the area of the highway segment. Although the department may typically hold a hearing in the project area, in some circumstances it may not be feasible or beneficial to obtain a suitable hearing facility in the project area. In response to the issues raised by these comments, the department will revise the section to require, in addition to a hearing, one or more public meetings. Public meetings are more informal gatherings that allow an opportunity for the department to provide project information to the public while receiving more informal public input. The department will hold public meetings in the area of the highway segment if practicable. The section is also revised to require a hearing in each county in which the project is located. Notice of the hearing will be published in each of those counties.

The department does not agree to publishing a list of individuals responsible for the approval of a conversion. The commission is solely responsible for approval. The department will also not define the individual or group who will be evaluating the public response. Various individuals employees of the department may provide information to commissioners. This is purely an internal management concern, and the commission is ultimately responsible for evaluating public response.

Section 27.14(c), Criteria.

Comment: An individual proposed requiring city approval of a conversion, and requiring that the commission determine that there is significant public support for the transfer.

Response: The department disagrees with this proposal. The section does require the commission to consider public support. Requiring a finding of significant public support and a consensus among local governments would unduly restrict the ability of the commission to fulfill its statutory responsibility to make the decision whether to convert the facility or not.

Comment: Numerous individuals pointed out that the regional mobility authority (RMA) rules require the commission to determine that the public has a reasonable alternative route on non-toll roads prior to approving a transfer and conversion to an RMA, yet such a requirement is not included in these rules governing a conversion to a department turnpike project. They argued that the commission should be consistent and apply this provision to the county rules.

Response: The department agrees with these comments to a degree. The RMA rules require a determination that there is a reasonable alternative because that is required by statute. Such a determination was not included in other toll conversion rules because the commission desires to adopt rules that maximize the ability of the commission to respond to the individual circumstances of each proposed conversion. The department does agree that the commission should take into account this issue. The section is amended to require the commission to consider whether there is a reasonable alternative route on non-toll roads.

Comment: MBA and JTA argue that the reasonable alternative should not send traffic through neighborhoods or require significantly longer distance trips. They suggested adding language to that effect. Several individuals argued that the term "reasonable alternative route on toll roads" should be precisely defined. They stated that, at the very least, it needs to be clear on how out-of-the-way a non-toll option will be and whether or not it can include neighborhood routes. They further argued that the alternative must not include neighborhood routes (which should be defined), "as somehow neighborhood roadways do not equate to subsections of a state highway."

Response: The department disagrees with requiring an affirmative finding that the alternative does not send traffic through neighborhoods or require significantly longer distance trips. These conditions are too subjective and would therefore neither benefit the commission nor the public by their inclusion. The department also does not desire to provide a precise definition of a reasonable alternative route. The department does not believe that a precise definition would be useful for the infinite number of circumstances that would arise for each proposed transfer and conversion. The department does agree, however, that these issues are important and should be considered by the commission. The section is amended to require the commission, when considering whether there is a reasonable alternative route, to consider the impact on neighborhoods and the distance of the alternative route.

Comment: Several individuals requested a clarification of the term "county" throughout the proposed rules. Some individuals requested that when referring to sections of roadways being converted, the term refer only to the counties in which that section of roadway resides.

Response: The department disagrees that a clarification is necessary. The term does refer only to the counties in which the segment of roadway proposed for conversion is located.

Section 27.14(d), Preliminary Approval.

Comment: Several individuals asked the department to "define how public hearings/public input are affected when preliminary approval is given for the conversion of non-toll roads to toll roads."

Response: The department is unsure of the intent of this comment. The rules give the commission the ability to delay final approval of a proposed conversion if the commission decides that preliminary studies should first be completed. If the commission opts for a two-step approval process, the department will comply with the public input requirements prior to preliminary approval and again prior to the commission considering final approval. Subsection (d) of the section is revised to clarify that the public input process prior to final approval will be the same as the public input process prior to preliminary approval.

Subchapter B. TEXAS TURNPIKE AUTHORITY