News & Press: Capitol Report

Capitol Report - Transportation Funding & Duty to Defend

Monday, May 4, 2015  
Posted by: Michael Hancock
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May 4, 2015


The Texas House acted on two major ACEC Texas priorities during the last few days. First, SJR 5 by Sen. Robert Nichols and Rep. Joe Pickett, the proposed constitutional amendment on highway funding, passed the House with only two dissenting votes.


The House version differs from the version passed by the Senate. The House version reallocates $3 billion from the state's general sales tax collections from the general revenue fund to the state highway fund. The proposal also includes an escalator that, starting in 2017, would dedicate an additional amount based on a percentage of future sales tax collections (currently equaling an additional $600 million and growing). As passed by the House, the proposal would be voted on in November 2016.


There are a few problems with House floor amendments that will necessitate a conference committee between the two bodies. One amendment would apply in the event of an economic recession when state revenues decline; in this case the Legislature would be permitted to cancel the transfer to the highway fund. Some budget flexibility might be needed in this situation but the possibility of an outright cancellation could create substantial uncertainty in the program. A better solution would be to allow some percentage reduction.


Nevertheless, assuming that these problems can be worked out, House action on SJR 5 is a major step toward the goal of providing an additional $4 billion in funding for transportation improvements.


Second, the House passed HB 2049 by Rep. Drew Darby relating to "duty to defend" provisions in governmental contracts. HB 2049 prohibits governmental entities from requiring design professionals to pay a governmental entity's defense costs in a lawsuit unless and until there is a determination of negligence. At that point, an engineer will be responsible for his or her negligence and the legal fees associated with that. The bill also establishes that contract clauses related to professional standard of care are within the bounds of what is insurable.


Several urban counties mounted strong opposition to the bill, although this opposition seems to be based on the mistaken assumption that HB 2049 somehow limits a county's ability to get indemnity for an engineer or architect's negligence. It does not. Here's what it does and does not do:

  • This bill does NOT change in any way the responsibility that an engineer has for his or her own negligence or limit the liability for that.
  • This bill does NOT change in any way the ability of a governmental entity to be fully indemnified against an engineer's negligence.
  • This bill does NOT change in any way the ability of a governmental entity to be fully reimbursed for legal fees associated with an engineer's negligence.
  • This bill does NOT change in any way the standard of care that currently applies in professional liability policies for engineers.
  • This bill, after a clarifying amendment we will add in the Senate, will NOT change in any way the ability of a governmental entity to be named as an additional insured under an engineer's general liability policy and receive any duty to defend provided by that policy.
  • This bill does NOT change in any way a governmental entity's responsibility for its own negligence, which is already the law.

This bill changes ONLY one thing - the ability of a governmental entity to make another party pay the legal costs associated with the governmental entity's negligence.




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