Can TxDOT still add to the North Tarrant Express toll project after the 2017 contract deadline?

Plain-English summary

The North Tarrant Express is a large Dallas-Fort Worth highway project built and operated under a public-private deal called a comprehensive development agreement (CDA). Under a CDA, the state contracts with a private entity to design, finance, build, maintain, and operate highway segments, often over decades. Two state senators asked the AG a pointed question about that arrangement: since Senate Bill 1730 ended the Texas Department of Transportation's authority to enter new comprehensive development agreements after August 31, 2017, could TxDOT still enter a new "facility agreement" under the North Tarrant Express CDA after that date?

The AG separated two different kinds of authority. The 2017 sunset in S.B. 1730 applied to the Department's power to enter brand-new comprehensive development agreements; it did not undo CDAs the Department had already signed. TxDOT entered the North Tarrant Express CDA in 2009, and it remained operational. On top of that, in 2011 the Legislature passed Transportation Code section 223.2012, written specifically for the North Tarrant Express project. That section authorizes the CDA to provide for negotiating and entering facility agreements for future phases or segments of the project at whatever times the Department considers advantageous. So the authority to keep adding facility agreements for this project flows from section 223.2012(b), a project-specific grant that the 2017 general sunset did not touch.

The senators also asked about two mechanics. First, TxDOT was using a change order to expand the scope of work under an existing facility agreement. Chapter 223, subchapter E does not mention change orders, but the AG noted the Department has ongoing authority to enter new facility agreements for project phases and broad authority under section 223.2012(e) to negotiate any matter in the CDA it considers advantageous. Reading those together, the AG concluded a court would likely find TxDOT may use a change order to expand the scope of work within a facility agreement, as long as that work is within the scope of the CDA.

Second, the senators asked whether TxDOT could enter or change facility agreements without competitive bidding. The AG explained that the Legislature required competitive procurement for the comprehensive development agreement itself (section 223.203(a)), but expressly exempted the subsequent facility agreements with the developer (or an entity controlled by or under common control with the developer) from any further competitive process, in section 223.2012(c). So no new competitive bidding is required for those facility agreements.

Currency note

This opinion was issued in 2019. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

The Legislature and the requesting senators: At the time of the opinion, the AG read the 2017 sunset on new comprehensive development agreements as not reaching facility agreements under the already-existing North Tarrant Express CDA, because section 223.2012(b) gave the Department project-specific authority to enter those agreements. The opinion explained why TxDOT's continued contracting on the project was grounded in statute despite the general sunset.

TxDOT and the project developer: The opinion described the Department's authority to enter facility agreements when advantageous, to use change orders to expand scope within the CDA, and to do so without a new competitive procurement under section 223.2012(c).

Taxpayers and transparency watchers: The opinion laid out the statutory basis for, and the limits on, TxDOT's facility agreements and the competitive-bidding exemption, so the public could see where each piece of authority came from.

Common questions

Did the 2017 deadline stop TxDOT from doing more on the North Tarrant Express?
No. The AG explained the deadline ended authority to enter new comprehensive development agreements but did not invalidate the 2009 North Tarrant Express CDA, and section 223.2012(b) separately authorizes facility agreements for the project's future phases.

Where does the authority to keep signing facility agreements come from?
From Transportation Code section 223.2012(b), a project-specific grant enacted in 2011 that lets the CDA provide for facility agreements whenever the Department considers it advantageous.

Can TxDOT expand a facility agreement with a change order?
The AG concluded a court would likely find yes, as long as the added work is within the scope of work under the comprehensive development agreement, given the broad negotiating authority in section 223.2012(e).

Does TxDOT have to rebid these facility agreements?
No. The AG concluded section 223.2012(c) exempts facility agreements with the developer or an affiliated entity from any further competitive procurement, even though the original CDA required competitive bidding.

Background and statutory framework

Chapter 223, subchapter E of the Transportation Code (sections 223.201-.209) governs TxDOT's authority to enter comprehensive development agreements with private entities for certain highway projects. The Legislature first authorized such agreements in 2005 (Act of May 29, 2005), and Senate Bill 1730 (2013) amended section 223.201(i) to end the Department's authority to enter new comprehensive development agreements after August 31, 2017, without invalidating earlier agreements. TxDOT entered the North Tarrant Express CDA on June 23, 2009.

In 2011 the Legislature enacted section 223.2012, providing project-specific authority and direction for the North Tarrant Express. Subsection (b) authorizes the CDA to provide for negotiating and entering facility agreements for future phases or segments when the Department considers it advantageous; subsection (d) requires such facility agreements to terminate on or before June 22, 2061; subsection (e) authorizes the Department to negotiate any matter in the CDA it considers advantageous; and subsection (c) exempts subsequent facility agreements with the developer or a controlled or commonly controlled entity from any further competitive procurement. Section 223.203(a) required a best-value competitive procurement for the CDA itself, and section 223.201(f)(3) authorized the CDA for the Interstate Highway 35W project in Tarrant County. A footnote noted that the Office of the Attorney General had found a 2018 North Tarrant Express Segment 3C change order and amended and restated facility agreement legally sufficient.

Citations

Statutory and session-law provisions:

• Tex. Transp. Code §§ 223.201-.209; § 223.201(i); § 223.201(f)(3); § 223.2012(a), (b), (c), (d), (e); § 223.203(a)
• Act of May 23, 2013, 83d Leg., R.S., ch. 1234, § 1, 2013 Tex. Gen. Laws 3113, 3114 (Senate Bill 1730)
• Act of May 29, 2005, 79th Leg., R.S., ch. 281, § 2.21, 2005 Tex. Gen. Laws 778, 790-91

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0253
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2019/kp0253.pdf

Original opinion text

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

May 24, 2019

The Honorable Bob Hall Opinion No. KP-0253
Chair, Committee on Agriculture
Texas State Senate Re: Whether the Texas Transportation
Post Office Box 12068 Commission is authorized to enter into a facility
Austin, Texas 78711-2068 agreement under the North Tarrant Express
Comprehensive Development Agreement
The Honorable Lois Kolkhorst (RQ-0281-KP)
Chair, Committee on Public Health
Texas State Senate
Post Office Box 12068
Austin, Texas 78711-2068

Dear Senator Hall and Senator Kolkhorst:

    You ask whether the Texas Department of Transportation (the "Department") "has legal authority to enter into another facility agreement under the North Tarrant Express Comprehensive Development Agreement ... when authority to enter into such contracts expired on August 31, 2017,"1 per Senate Bill 1730 ("S.B. 1730"), passed by the Eighty-third Legislature.2

     Chapter 223, subchapter E of the Transportation Code governs the Department's authority to enter into comprehensive development agreements with a private entity to design, develop, finance, construct, maintain, repair, operate, extend, or expand certain highway projects. See generally TEX. TRANSP. CODE §§ 223.201-.209. The Legislature originally authorized the Department to enter into comprehensive development agreements in 2005 for a limited time period.3 You note that S.B. 1730, enacted by the Eighty-third Legislature in 2013, extinguished the Department's authority to enter into any new comprehensive development agreements after August 31, 2017. Request Letter at 1; S.B. 1730 (amending TEX. TRANSP. CODE § 223.201(i)). However, S.B. 1730 did not invalidate agreements entered into prior to that date. See S.B. 1730.

  The Department entered into the North Tarrant Express Comprehensive Development Agreement on June 23, 2009, and that agreement remains operational. See TEX. TRANSP. CODE § 223.2012(a). In 2011, the Legislature enacted section 223.2012 of the Transportation Code, providing specific authority and direction to the Department for the North Tarrant Express Project. See id. In that section, the Legislature authorized the comprehensive development agreement to "provide for negotiating and entering into facility agreements for future phases or segments of the project at the times that the department considers advantageous to the department." Id. § 223.2012(b). Thus, the Legislature acknowledged that while the Department entered into the comprehensive development agreement in 2009, it would need ongoing authority to enter into facility agreements for specific phases of the project in the future.4 Through section 223.2012(b) of the Transportation Code, the Legislature granted the Department legal authority to enter into facility agreements under the North Tarrant Express Comprehensive Development Agreement when the Department considers it advantageous to do so. See id.

   In addition to asking about authority to enter into facility agreements, you explain that the Department is using "a change order to the original facility agreement to expand the scope of work." Request Letter at 1. You question whether the Department's procedure is a permissible means to expand the scope of work under an existing facility agreement. Id. at 3. Chapter 223, subchapter E, does not discuss change orders specifically; but as discussed above, the Department possesses ongoing authority to enter into new facility agreements for specific phases of the project within the scope of the comprehensive development agreement. Furthermore, the Legislature authorized the Department to "negotiate any matter in a comprehensive development agreement for the North Tarrant Express project that the department considers advantageous to the department." TEX. TRANSP. CODE § 223.2012(e). Given this broad authority, a court would likely conclude that the Department may use a change order to expand the scope of work within a facility agreement as long as that work is encompassed in the scope of work under the comprehensive development agreement.5 See id. § 223.201(f)(3) (authorizing the Department to enter into a comprehensive development agreement for "the Interstate Highway 35W project in Tarrant County from Interstate Highway 30 to State Highway 114").

     You also question whether the Department is authorized to enter into or change terms to a facility agreement without engaging in competitive bidding. Request Letter at 3. The Legislature required the Department to engage in competitive bidding procedures when entering into the comprehensive development agreement. See TEX. TRANSP. CODE § 223.203(a) (requiring the Department to "use a competitive procurement process that provides the best value"). But the Legislature expressly exempted the Department from competitive procurement processes for the subsequent facility agreements with the project developer under the comprehensive development agreement:

          The department is not required to use any further competitive procurement process to enter into one or more related facility agreements with the developer or an entity controlled by, to be controlled by, or to be under common control with the developer under the comprehensive development agreement for the North Tarrant Express project.

Id. § 223.2012(c). Thus, when the Department enters into or changes terms to a facility agreement with the project developer, the Legislature does not require that it use competitive bidding.

                                  SUMMARY

                   By operation of section 223.2012(b) of the Transportation Code, the Legislature granted the Department of Transportation authority to enter into facility agreements under the North Tarrant Express Comprehensive Development Agreement when the Department considers it advantageous to do so.

                 A court would likely conclude that the Department may use a change order to expand the scope of work within a facility agreement as long as that work is encompassed in the scope of work under the comprehensive development agreement.

                  Pursuant to subsection 223.2012(c) of the Transportation Code, the Legislature does not require the Department to use a competitive procurement process to enter into a facility agreement with the developer or an entity controlled by, to be controlled by, or to be under common control with the developer under the comprehensive development agreement for the North Tarrant Express project.

                                         Very truly yours,

                                         KEN PAXTON
                                         Attorney General of Texas

JEFFREY C. MATEER
First Assistant Attorney General

RYAN L. BANGERT
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

1Letter from Honorable Bob Hall, Chair, Senate Comm. on Agric., & Honorable Lois Kolkhorst, Chair, Senate Comm. on Pub. Health, to Honorable Ken Paxton, Tex. Att'y Gen. at 1 (Apr. 2, 2019) https://www2.texasattorneygeneral.gov/opinion/requests-for-opinion-rqs ("Request Letter").
2See Act of May 23, 2013, 83d Leg., R.S., ch. 1234, § 1, 2013 Tex. Gen. Laws 3113, 3114.
3See Act of May 29, 2005, 79th Leg., R.S., ch. 281, § 2.21, 2005 Tex. Gen. Laws 778, 790-91.
4Any facility agreements the Department enters into "for the North Tarrant Express project must terminate on or before June 22, 2061." TEX. TRANSP. CODE § 223.2012(d).
5In November of 2018, the Department requested a legal sufficiency review of the North Tarrant Express Segment 3C Change Order and Amended and Restated Facility Agreement for the North Tarrant Express Segments 3A, 3B, and 3C Facility by the Office of the Attorney General, and this office determined that both were legally sufficient.