(a) Form of master agreement.   (1) When an application for participation in the prepayment funding agreement program is approved, the department and utility shall negotiate in good faith to enter into a master agreement in written form approved by the director.   (2) The term of the master agreement must be a multiple of three years and a minimum of six years.   (3) The master agreement must include:     (A) the annual prepayment amount for each year of the initial three year period; and     (B) the conditions for payment by the utility of each annual prepayment amount, including the method of payment by either annual or quarterly installments and the time of payment as authorized in this section.   (4) The master agreement must identify the responsibilities of each party, including the payment by the utility of the annual prepayment amount and the payment by the department to the utility in the amount equal to all of its allowable relocation/adjustment costs.   (5) The master agreement must include a statement that the parties will execute a separate project utility agreement in accordance with the requirements of this subchapter for each highway improvement project.   (6) The master agreement must include a statement that the parties will execute a comprehensive utility installation request or notice form for that portion of a relocation located on land for which the utility has no compensable property interest and a comprehensive utility joint use acknowledgement agreement for that portion of a relocation located on land for which the utility has a compensable property interest. The statement must provide that:     (A) the agreement obligations will apply to all relocations under this subchapter that result in a portion of the utility facilities being placed in a new location, vertical elevation, or horizontal alignment;     (B) for each relocation that results in a change of location as indicated in subparagraph (A) of this paragraph, the utility will provide a complete set of drawings showing the new location and will attach to the comprehensive utility installation request or joint use acknowledgement, as applicable, that set of drawings and a supplement that references the location by department district, county and highway control section, and the state highway designation and that is dated and signed by the utility and the department; and     (C) each comprehensive utility installation request and comprehensive utility joint use acknowledgement agreement will provide for the amendment or termination of the document, as required to bring the parties into compliance with future material changes to applicable federal and state laws, rules, and regulations.   (7) The master agreement must include a statement:     (A) by the utility that the relocation of utility facilities performed by or on behalf of the utility will comply with applicable federal and state laws and regulations including the utility accommodation rules set forth in Subchapter C of this chapter and the Utility Manual promulgated by the department, to the extent its requirements do not conflict with this subchapter;     (B) that the utility is responsible for its own acts and deeds and for those of its agents or employees during the performance of its utility relocation; and     (C) that the department, during and upon completion of the relocation work for purposes of reimbursement under §21.929 of this subchapter, has the right to inspect, at its own expense, the relocation work performed by the utility or its contractors.   (8) The master agreement must provide that in the event of a dispute, the utility and department agree to continue their respective performance under the master agreement and individual project utility agreements, including the performance of relocation work and the payment of allowable relocation/adjustment costs, and the continuation of performance shall not be construed as a waiver of any legal right. (b) Payment of the annual prepayment amounts.   (1) The first annual prepayment amount is due upon execution of the master agreement and shall be remitted to the department at a location designated in the master agreement.   (2) The payment of each succeeding annual prepayment amount shall be remitted to the department at the same location as the first payment on or before the anniversary date of the master agreement.   (3) The master agreement must provide that at the option of the utility and upon prior written notice to the department, the annual prepayment amount is due and payable in four equal quarterly installments without interest, beginning upon execution of the master agreement for the first year and the anniversary date of the agreement for succeeding years.   (4) Interest on all past due amounts will accrue at the rate described in Government Code, §2251.025, or its successor statute, from the due date until the date paid. (c) Deposit of funds. Funds provided by the utility will be deposited into the state treasury to the credit of the state highway fund. The department will not pay interest on the funds. (d) Payment default by utility. If the utility fails to timely pay the annual prepayment amount or any installment, if the installment option is used, within 30 days after the date that written notice of the default is received, the department may terminate the master agreement by providing written notice of termination to the utility. (e) Payment default by department. If the department fails to timely pay reimbursements as required by §21.929 of this subchapter, the utility may send a written notice of default to the department at the location designated in the master agreement. If the department fails to timely cure the default within 30 days after the date that written notice of the default is received, and there have been two or more separate defaults and failures to cure within any one year period of the master agreement term, the utility may, in addition to those remedies provided in Government Code, Chapter 2251, terminate the master agreement by sending written notice of termination to the department at the location designated in the master agreement. At the utility's option and as indicated in its written notice, the termination may be effective immediately or at the end of that one year period of the master agreement term. (f) Termination. In addition to the authority to terminate the master agreement provided under another provision of this subchapter, the master agreement may be terminated by mutual agreement of the parties. Upon termination of the master agreement for any reason:   (1) the department will retain all utility prepayments received before the date of termination; and   (2) neither party will have any further obligations under the master agreement, except that the department will continue to reimburse the utility under the terms of the master agreement or any individual project utility agreement for relocation/adjustment costs incurred by the utility prior to the date of termination. (g) Indirect and overhead costs.   (1) Indirect and overhead costs to be charged and reimbursed under the prepayment funding agreement program will be based on a percentage calculated according to the methodology described in the utility's application submitted and approved by the department under §21.924 of this subchapter. The calculation of specific indirect and overhead costs to be applied to each project utility agreement will be determined in accordance with the methodology provided in the approved application.   (2) During the 60 day period preceding each anniversary date of the master agreement, the utility may request a change in the methodology for calculating indirect and overhead by sending a written request to the department at the location designated in the master agreement. The utility must submit with the request the information required by §21.924(a)(5) of this subchapter and an explanation of the change, certified by the utility's president, chief executive officer, or senior level executive.   (3) The utility shall allow the department and its representatives, upon 30 days written notice to the utility, to audit the financial information that supports the methodology during the utility's regular business hours, as the department reasonably deems necessary for the purpose of verifying that the requested change submitted under paragraph (2) of this subsection complies with Generally Accepted Accounting Principles, 23 C.F.R. Chapter 1, Part 645, Subpart A, and Federal Acquisition Regulations under 48 C.F.R. Chapter 1. All audits must be completed and any objections by the department to the utility's proposed change to the calculation of indirect and overhead costs must be submitted by the director in writing to the utility within 60 days after the date of the department's receipt of the utility's request under paragraph (2) of this subsection. In the event of an objection to the utility's requested change in the indirect and overhead costs calculation methodology, the parties will follow the procedures of §21.926(e) and (f) of this subchapter as if the objection were an objection to a utility's calculation of relocation/adjustment costs.   (4) Pending a final determination of the change in the indirect and overhead costs calculation methodology, the prior methodology will apply to all final bill submissions. (h) Notice requirements. Any acceptance, approval, or any other like action required or permitted to be given by either the department or the utility under this subchapter or any agreement executed to implement this subchapter:   (1) must be in writing to be effective;   (2) shall not be unreasonably withheld or delayed; and   (3) if acceptance, approval, or other action is withheld, the withholding party must provide to the other party notice that states with specificity the reason for withholding acceptance, approval, or other action and must make every effort to identify with as much detail as possible the changes necessary for acceptance, approval, or other action. (i) Accounting system. The utility will notify the department in writing of any change that would significantly alter the utility's accounting system described in its application under §21.924 of this subchapter. The notice must include a description of the resulting accounting system and a certification by the utility's president, chief executive officer, or senior level executive that the resulting accounting system complies with the requirements of that section. (j) Amendment. The master agreement may be amended or modified only by a written instrument executed by the department and utility. (k) Choice-of-law. The master agreement will be construed under the laws of the State of Texas, without regard to choice-of-law rules of any jurisdiction.

Source Note: The provisions of this §21.925 adopted to be effective March 20, 2008, 33 TexReg 2340