S.B. No. 1289

	AN ACT
	relating to the purchase of iron and steel products made in the
	United States for certain governmental entity projects.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Chapter 2252, Government Code, is amended by
	adding Subchapter F to read as follows:
	SUBCHAPTER F.  CERTAIN CONSTRUCTION AND INSTALLATION PROJECTS
	Sec. 2252.201.  DEFINITIONS.  In this subchapter:
	(1)  "Governmental entity" means this state or a board,
	commission, department, office, or other agency in the executive
	branch of state government. The term does not include a political
	subdivision.
	(2)  "Manufacturing process" means the application of a
	process to alter the form or function of materials or elements of a
	product in a manner that adds value and transforms the materials or
	elements into a new finished product that is functionally different
	from a finished product produced merely from assembling the
	materials or elements into a product.
	(3)  "Political subdivision" includes a county,
	municipality, municipal utility district, water control and
	improvement district, special utility district, and other types of
	water district.
	(4)  "Produced in the United States" means, with
	respect to iron and steel products, a product for which all
	manufacturing processes, from initial melting through application
	of coatings, occur in the United States, other than metallurgical
	processes to refine steel additives.
	(5)  "Project" means a contract between a governmental
	entity and another person, including a political subdivision, to:
	(A)  construct, remodel, or alter a building, a
	structure, or infrastructure;
	(B)  supply a material for a project described by
	Paragraph (A); or
	(C)  finance, refinance, or provide money from
	funds administered by a governmental entity for a project described
	by Paragraph (A).
	Sec. 2252.202.  UNIFORM PURCHASING CONDITION; RULES.
	(a)  Except as provided by Section 2252.203, the uniform general
	conditions for a project in which iron or steel products will be
	used must require that the bid documents provided to all bidders and
	the contract include a requirement that any iron or steel product
	produced through a manufacturing process and used in the project be
	produced in the United States.
	(b)  A governmental entity subject to the requirements for a
	project described by Subsection (a) shall adopt rules to promote
	compliance with this section.
	Sec. 2252.2025.  REPORT. (a)  Not later than December 1,
	2018, the Texas Water Development Board shall electronically submit
	to the state auditor a report on all contracts for construction of a
	project that received financial assistance under Chapter 15, 16, or
	17, Water Code, during the state fiscal year ending August 31, 2017.
	The report must include:
	(1)  the impacts on a political subdivision that has
	obtained or applied for financial assistance from the board under
	Chapter 15, 16, or 17, Water Code; and
	(2)  for each project that has obtained financial
	assistance as described by this subsection:
	(A)  the country of origin of the iron and steel
	products used in the project, in accordance with 19 U.S.C. Section
	1304;
	(B)  the cost and quantity of all iron and steel
	products received from each country of origin for the project; and
	(C)  any related bond information, including the
	credit rating of general obligation bonds or revenue bonds issued
	by the board to finance or refinance projects included in the state
	water plan and the potential impact to that credit rating as a
	result of the bond issuance by the board.
	(b)  The state auditor shall prepare a summary on the report
	submitted under Subsection (a) and electronically submit the
	summary to the legislature not later than January 1, 2019.
	(c)  This section expires September 1, 2019.
	Sec. 2252.203.  EXEMPTIONS.  (a)  Section 2252.202 does not
	apply to a project for which the governing body of the governmental
	entity responsible for the project determines that:
	(1)  iron or steel products produced in the United
	States are not:
	(A)  produced in sufficient quantities;
	(B)  reasonably available; or
	(C)  of a satisfactory quality;
	(2)  use of iron or steel products produced in the
	United States will increase the total cost of the project by more
	than 20 percent; or
	(3)  complying with that section is inconsistent with
	the public interest.
	(b)  Electrical components, equipment, systems, and
	appurtenances, including supports, covers, shielding, and other
	appurtenances related to an electrical system, necessary for
	operation or concealment are not considered to be iron or steel
	products and are exempt from the requirements of Section 2252.202.
	An electrical system includes all equipment, facilities, and assets
	owned by an electric utility, as that term is defined in Section
	31.002, Utilities Code.
	(c)  Section 2252.202 does not apply to a contract subject to
	Section 223.045, Transportation Code, or 23 C.F.R. Section 635.410.
	Sec. 2252.204.  INTERNATIONAL AGREEMENTS.  This subchapter
	shall be applied in a manner consistent with this state's
	obligations under any international agreement.
	Sec. 2252.205.  CONFLICT OF LAW. To the extent of any
	conflict or inconsistency, this subchapter prevails over any other
	state law relating to the use of iron and steel products in projects
	directly funded by a governmental entity or financed by funds
	administered by a governmental entity.
	SECTION 2.  Section 223.045, Transportation Code, is amended
	to read as follows:
	Sec. 223.045.  IRON AND STEEL PREFERENCE PROVISIONS IN
	IMPROVEMENT CONTRACTS. A contract awarded by the department for
	the improvement of the state highway system without federal aid
	must contain the same preference provisions for iron and steel and
	iron and steel products that are required under federal law for an
	improvement made with federal aid.
	SECTION 3.  Section 17.183(a), Water Code, is amended to
	read as follows:
	(a)  The governing body of each political subdivision
	receiving financial assistance from the board shall require in all
	contracts for the construction of a project:
	(1)  that each bidder furnish a bid guarantee
	equivalent to five percent of the bid price;
	(2)  that each contractor awarded a construction
	contract furnish performance and payment bonds:
	(A)  the performance bond shall include without
	limitation guarantees that work done under the contract will be
	completed and performed according to approved plans and
	specifications and in accordance with sound construction
	principles and practices; and
	(B)  the performance and payment bonds shall be in
	a penal sum of not less than 100 percent of the contract price and
	remain in effect for one year beyond the date of approval by the
	engineer of the political subdivision;
	(3)  that payment be made in partial payments as the
	work progresses;
	(4)  that each partial payment shall not exceed 95
	percent of the amount due at the time of the payment as shown by the
	engineer of the project, but, if the project is substantially
	complete, a partial release of the five percent retainage may be
	made by the political subdivision with approval of the executive
	administrator;
	(5)  that payment of the retainage remaining due upon
	completion of the contract shall be made only after:
	(A)  approval by the engineer for the political
	subdivision as required under the bond proceedings;
	(B)  approval by the governing body of the
	political subdivision by a resolution or other formal action; and
	(C)  certification by the executive administrator
	in accordance with the rules of the board that the work to be done
	under the contract has been completed and performed in a
	satisfactory manner and in accordance with approved plans and
	specifications;
	(6)  that no valid approval may be granted unless the
	work done under the contract has been completed and performed in a
	satisfactory manner according to approved plans and
	specifications;
	(7)  that, if a political subdivision receiving
	financial assistance under Subchapter K of this chapter, labor from
	inside the political subdivision be used to the extent possible;
	and
	(8)  that the contract include a requirement that iron
	and steel products [and manufactured goods] used in the project be
	produced in the United States, unless:
	(A)  such products [or goods] are not:
	(i)  available in sufficient quantities;
	(ii)  readily available; or
	(iii)  of a satisfactory quality; or
	(B)  the use of such products [or goods] will
	increase the total cost of the project by more than 20 percent.
	SECTION 4.  Section 17.183(c)(4), Water Code, is amended to
	read as follows:
	(4)  "Produced in the United States" means,[:
	[(A)]  in the case of iron and steel products,
	products for which all manufacturing processes, from initial
	melting through application of coatings, take place in the United
	States, except metallurgical processes that involve the refinement
	of steel additives[; and
	[(B)     in the case of a manufactured good, a good
	for which:
	[(i)     all of the manufacturing process that
	produced the manufactured good takes place in the United States;
	and
	[(ii)     more than 60 percent of the
	components of the manufactured good, by cost, originate in the
	United States].
	SECTION 5.  Sections 17.183(c)(1) and (2) and (d), Water
	Code, are repealed.
	SECTION 6.  (a)  Subchapter F, Chapter 2252, Government
	Code, as added by this Act, applies only to bid documents submitted
	or contracts entered into on or after the effective date of this
	Act.
	(b)  Subchapter F, Chapter 2252, Government Code, as added by
	this Act, does not apply to a project as described by Section 15.432
	or 15.472, Water Code, that the Texas Water Development Board has
	formally approved for financial assistance.  In this subsection,
	the term "formally approved" means any project that is the subject
	of a resolution approving an application for financial assistance
	adopted by the Texas Water Development Board before May 1, 2019, for
	any portion of the financing of the project.
	SECTION 7.  This Act takes effect September 1, 2017.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 1289 passed the Senate on
	May 3, 2017, by the following vote:  Yeas 23, Nays 7, one present
	not voting; May 17, 2017, Senate refused to concur in House
	amendments and requested appointment of Conference Committee;
	May 19, 2017, House granted request of the Senate; May 27, 2017,
	Senate adopted Conference Committee Report by the following
	vote:  Yeas 23, Nays 7, one present not voting.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 1289 passed the House, with
	amendments, on May 12, 2017, by the following vote:  Yeas 109,
	Nays 33, one present not voting; May 19, 2017, House granted
	request of the Senate for appointment of Conference Committee;
	May 27, 2017, House adopted Conference Committee Report by the
	following vote:  Yeas 102, Nays 33, one present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor