Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF TRANSPORTATION

OF THE STATE OF MONTANA

In the matter of the adoption of New Rules I through VIII pertaining to Fuel Tax Bridge and Road Safety and Accountability Program

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NOTICE OF PROPOSED ADOPTION

NO PUBLIC HEARING CONTEMPLATED

TO: All Concerned Persons

1. On November 13, 2017, the Department of Transportation proposes to adopt the above-stated rules.

2. The Department of Transportation will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact Department of Transportation no later than 5:00 p.m. on November 3, 2017, to advise us of the nature of the accommodation that you need. Please contact Larry Flynn, Department of Transportation, Administration Division, P.O. Box 201001, Helena, Montana, 59620-1001; telephone (406) 444-9418; fax (406) 444-5411; TTY Service (406) 444-7696 or (800) 335-7592; or e-mail [email protected].

3. GENERAL STATEMENT OF REASONABLE NECESSITY The 2017 Legislature enacted Chapter 267, Laws of 2017 (House Bill 473), an Act revising highway funding laws; revising laws concerning the deposit and expenditure of highway revenue; establishing a highway restricted account and a bridge and road safety and accountability restricted account; increasing the fuel tax and special fuel tax; providing that the new revenue must fund highway projects and local road projects; providing for a local government road match program; requiring a performance audit of the Department of Transportation; requiring the Department of Transportation to publish a website showing projects funded with the increased revenue; and providing a statutory appropriation and an appropriation.

The bill established the Bridge and Road Safety and Accountability (BARSAA) program to provide funding to eligible local governments for construction, reconstruction, maintenance and repair of rural roads, city or town streets and alleys, and bridges. A portion of motor fuel tax revenues generated within the State of Montana provides the funding for this program, and allocates a portion of the fuel tax to local governments. The bill became effective July 1, 2017.

The department is adopting New Rules I through VIII to conform to the new legislative changes and implement the bill by detailing the process used by local governments for the new BARSAA program.

4. The rules as proposed to be adopted provide as follows:

NEW RULE I DEFINITIONS The following definitions apply to terms found in this subchapter:

(1) "Allocate" or "allocation" means the department's annual calculation of a local government's share, in the ratio provided for in 15-70-101, MCA, of BARSAA revenue collected during the previous calendar year.

(2) "Bridge and Road Safety and Accountability" program, or "BARSAA" means the local government road construction and maintenance match program established by [Ch. 267, L. 2017].

(3) "Calendar year" means a twelve-month period between January 1 and the following December 31.

(4) "Collected" means revenue received as required by 15-70-403, MCA.

(5) "Completed project" means a closed project on which planned expenditures for the project have been paid in full.

(6) "Distribute" or "distribution" means the department's disbursement of allocated or reserved BARSAA funds to local governments.

(7) "Fiscal year" means the twelve-month period between July 1 and the following June 30.

(8) "Local government" means a Montana city, town, county or consolidated city-county government.

(9) "Locally designated signature authority" means the person identified by a local government as authorized to approve requests for distribution, requests for reservation, and annual reports.

(10) "Obligate" or "obligation of funds" means an action by a local government to commit the BARSAA funds to a project, either through a contract or by inclusion as an authorized expenditure in a local government's fiscal year budget.

(11) "Project description" includes: project name, project location, type of work, total cost estimate, source of match, and estimated completion date.

(12) "Reserve" means allocated BARSAA funds held by the department at the request of a local government.

(13) "Unobligated funds" means funds not obligated by March 1, five years after the calendar year in which the funds were distributed or would have been distributed if not reserved, which must be returned to the department's BARSAA local government restricted account.

(14) "Unused funds" means funds not used by a local government for the requested purpose or project, by March 1, five years after the calendar year in which the funds were distributed or would have been distributed if not reserved, which must be returned to the department's BARSAA local government restricted account.

(15) "Withdrawn project" means a project a local government has removed from its original distribution request list or re-prioritized after distribution of funds.

AUTH: 15-70-104, MCA

IMP: Ch. 267, Sections 2, 3, and 5, L. 2017

NEW RULE II ELIGIBILITY – ALLOCATION – MATCHING FUNDS (1) Any local government in Montana is eligible to receive BARSAA program funds.

(2) BARSAA revenue collected in the previous calendar year must be allocated by the department and held in the BARSAA restricted account for the benefit of local governments.

(3) Allocations must be made by the department by March 1 of each year.

(4) The department shall notify a local government of its allocation amount annually, by March 1 of each year.

(5) A local government must match each $20 request for distribution with at least $1 of local government budgeted matching funds. A local government must identify the source of the budgeted matching funds, which may not be from the motor fuel tax allocation in 15-70-101, MCA.

AUTH: 15-70-104, MCA

IMP: Ch. 267, Sections 2 and 3, L. 2017

NEW RULE III DISTRIBUTION TERMS AND CONDITIONS (1) The department allocates, reserves, and distributes the local government share of BARSAA funds, and maintains a project reporting website under the BARSAA program. The department does not monitor or oversee local government projects included in the local government's request for distribution.

(2) All BARSAA funds allocated under this program must be utilized for:

(a) construction, reconstruction, maintenance and repair of rural roads, city or town streets and alleys, and bridge projects; or roads and streets a local government has the responsibility to maintain, which does not include purchase of capital equipment; or

(b) a match for federal funds used for the construction of roads and streets that are a part of the national, primary, secondary or urban highway systems; or roads and streets a local government has the responsibility to maintain.

(3) The proposed projects must be detailed in a distribution request submitted by an eligible local government, in a format provided by the department. A local government requestor is responsible for retaining and providing documentation to ensure all funding received under the program is spent as defined and as provided in a local resolution and annual report.

(4) Projects budgeted within a local government's current fiscal year are eligible for distribution request of BARSAA program funds.

(5) The department shall make distribution within 30 calendar days of receipt of the completed request for distribution.

(6) A local government may withdraw a project originally listed on a distribution request, which action shall be deemed a completed project, creating unused funds. Within 90 days of completion or withdrawal of a project, a local government shall notify the department of the intent to obligate any unused funds for additional project(s) by March 1, five years after the calendar year in which the funds were distributed or would have been distributed if not reserved, or to return any unused funds to the department. Additional projects are subject to the same request requirements found in these rules.

AUTH: 15-70-104, MCA

IMP: Ch. 267, Sections 2, 3, and 5, L. 2017

NEW RULE IV BARSAA MATCH FUNDS – ADMINISTRATION OF FEDERAL-AID PROJECTS (1) BARSAA program funds identified as match for federally funded projects being administered by the department will not be distributed separately to the local government, but will be moved by the department, upon request from the local government, to the highway state special revenue account as credit for the local government match for that identified project.

(2) BARSAA program funds identified as match for federally funded projects administered by a local government from federal funds received directly by the local government, or administered by another federal or state agency, including but not limited to discretionary or earmarked funds, will be distributed directly to the local government under this chapter.

AUTH: 15-70-104, MCA

IMP: Ch. 267, Sec. 3, L. 2017

NEW RULE V DISTRIBUTION REQUEST PROCESS – DEADLINES

(1) All eligible local government requestors must complete the BARSAA program distribution request form found on the Department of Transportation's web site at www.mdt.mt.gov.

(2) The local government requestor may request a distribution of allocated funds by submitting a request to the department between March 1 and November 1 of the calendar year the funds were allocated. The distribution request must include all requirements stated in [Ch. 267, Sec. 3, L. 2017] including:

(a) the amount of BARSAA funding sought, which may not exceed the amount allocated for that year, plus any eligible prior year reserved funds;

(b) a copy of an adopted resolution to request and accept the funding by the governing body of the local government. The resolution must identify the source of the matching funds required under [Ch. 267, Sec. 3, L. 2017];

(i) construction, reconstruction, maintenance or repair of rural roads, city or town streets or alleys, or bridges; or roads and streets the local government has responsibility to maintain; or

(ii) as a match for federal funds used for the construction of road and streets that are part of the national, primary, secondary or urban highway systems; or roads and streets the local government has responsibility to maintain.

(3) Each distribution request must be complete and accompanied by all required supplemental materials. The department has an obligation to screen projects for eligibility and may request additional information to ensure the distribution request meets the requirements of [Ch. 267, Sec. 3, L. 2017]. Distribution requests must be verified via electronic signature, by the locally designated signature authority, per the adopted resolution.

(4) All BARSAA program funds must be utilized solely for the project(s) as described in a local government's distribution request.

(5) Within 90 days of completion of a project, the local government shall notify the department of its intent to obligate any remaining funds for additional projects within five years of original allocation, or to return any unused funds to the department. Additional projects are subject to the same request requirements found in these rules.

(6) BARSAA program funds not distributed or reserved by a local government, or which are returned as unused, will remain in the BARSAA local government restricted account to be allocated in the next calendar year.

AUTH: 15-70-104, MCA

IMP: Ch. 267, Sections 2 and 3, L. 2017

NEW RULE VI RESTRICTED ASSET ACCOUNT – OBLIGATION OF FUNDS (1) A local government shall place BARSAA funds distributed by the department and the corresponding matching funds in a restricted asset account within the fuel tax apportionment fund that is carried forward until there is a need for the expenditure. The account must be kept separate from other local government accounts.

(2) A local government must obligate the funds by March 1, five years after the calendar year in which the funds were distributed or would have been distributed if not reserved.

(3) Unobligated funds must be returned to the department within 30 days of invoice date, and deposited in the BARSAA local government restricted account to be allocated for the BARSAA program in the next calendar year.

AUTH: 15-70-104, MCA

IMP: Ch. 267, Sections 2 and 3, L. 2017

NEW RULE VII RESERVATION OF ALLOCATED FUNDS (1) A local government's share of allocated BARSAA program funds may be reserved for up to two years.

(2) A local government may only reserve allocated funds if it is unable to match the funds as required by [Ch. 267, Sec. 3, L. 2017].

(3) An eligible local government requestor must complete the BARSAA program reservation request form found on the Department of Transportation's web site at www.mdt.mt.gov.

(4) Completed fund reservation requests and all supplemental materials must be received between September 1 and November 1 of the fiscal year after the fiscal year in which the department allocated the funds.

(5) The local government requestor must adopt a resolution to reserve the funding, and state the reservation is necessary due to the local government's inability to match funds as required by [Ch. 267, Sec. 3, L. 2017]. The resolution must be attached to the local government's reservation request to the department. Reservation requests must be verified via electronic signature, by the locally designated signature authority.

(6) If the local government does not request distribution of the reserved funds by November 1of the fiscal year two years after the reservation request, the funds shall revert to the BARSAA local government restricted account to be allocated for the BARSAA program in the next calendar year.

(7) Requests for distribution of reserved funds are subject to the same distribution request requirements found in these rules.

AUTH: 15-70-104, MCA

IMP: Ch. 267, Sections 2 and 3, L. 2017

NEW RULE VIII ANNUAL REPORT (1) A local government must submit an annual report to the department by December 31of each year providing information on projects listed on the appropriate annual distribution request (including projects administered by the department or by other government agencies), changes to the list of projects funded (including withdrawn projects, or added projects), and final project costs.

AUTH: 15-70-104, MCA

IMP: Ch. 267, Sec. 5, L. 2017

5. Concerned persons may submit their data, views, or arguments concerning the proposed actions in writing to: Larry Flynn, Department of Transportation, P.O. Box 201001, Helena, Montana, 59620-1001; telephone (406) 444-9418; fax (406) 444-5411; or e-mail [email protected], and must be received no later than 5:00 p.m., November 10, 2017.

6. If persons who are directly affected by the proposed actions wish to express their data, views, or arguments orally or in writing at a public hearing, they must make written request for a hearing and submit this request along with any written comments to Larry Flynn at the above address no later than 5:00 p.m., November 10, 2017.

7. If the agency receives requests for a public hearing on the proposed action from either 10 percent or 25, whichever is less, of the persons directly affected by the proposed action; from the appropriate administrative rule review committee of the Legislature; from a governmental subdivision or agency; or from an association having not less than 25 members who will be directly affected, a hearing will be held at a later date. Notice of the hearing will be published in the Montana Administrative Register. Ten percent of those directly affected has been determined to be 18 persons based on 185 eligible local governments.

8. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in 5 above or may be made by completing a request form at any rules hearing held by the department.

9. An electronic copy of this proposal notice is available through the Department of Transportation’s website at www.mdt.gov.

10. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor was contacted by U.S. mail on May 19, 2017.

11. With regard to the requirements of 2-4-111, MCA, the department has determined that the adoption of the above-referenced rules will not significantly and directly impact small businesses.

12. With regard to the requirements of 2-15-142, MCA, the department has determined that the adoption of the above-referenced rules will not have direct tribal implications.

/s/ Carol Grell Morris /s/ Michael T. Tooley

Carol Grell Morris Michael T. Tooley

Rule Reviewer Director

Department of Transportation

Certified to the Secretary of State October 2, 2017.