(a) This section applies to conservation projects financed by the board through a grant or loan and which include construction.     
      (b) Prior to the release of funds for construction of a conservation project, an approved applicant shall:      
        (1) submit to the executive administrator engineering plans and specifications, which shall be as detailed as would be required for submission to contractors bidding on the work and which shall be consistent with the engineering feasibility information submitted with the application;       
        (2) obtain written approval from the executive administrator of the submitted engineering plans and specifications; and       
        (3) for projects which the approved applicant will execute construction contracts, prior to receiving bids and awarding the contract, obtain executive administrator approval of the contract documents, such documents to include:                  (A) provisions assuring compliance with the board's rules and all relevant statutes;                   (B) provisions providing for the district to retain a minimum of 5.0% of the progress payments otherwise due to the contractor until construction is substantially complete and reduction in the retainage is authorized by the executive administrator;                   (C) a contractor's act of assurance form to be executed by the contractor which shall warrant compliance by the contractor with all laws of the State of Texas and all rules and published policies of the board; and                   (D) any additional conditions that may be requested by the executive administrator.         
      (c) If money from the fund will be used to purchase bonds, and proceeds of the bonds are required for planning, designing or preparation of plans and specifications or other activities not related to construction, the political subdivision may close the loan, receive funds for the money allocated for planning, designing or preparation of plans and specifications or other activities not related to construction if the funds for construction are deposited to an escrow account the agreement for which is acceptable to the executive administrator in form and substance.     
      (d) After the construction contract is awarded, the approved applicant shall:      
        (1) insure adequate inspection of the project by a registered professional engineer;       
        (2) obtain assurance from the engineer that the work is performed in a satisfactory manner in accordance with the approved plans and specifications, other engineering design or permit documents, approved alterations, and in accordance with sound engineering principles and construction practices;       
        (3) allow the executive administrator to inspect the construction and materials of any project at any time; and       
        (4) take corrective action as necessary to complete the project in accordance with approved plans and specifications or contract documents.       
      (e) Upon notice from the approved applicant or its project engineer that the project has been completed in accordance with approved plans and specifications, the executive administrator shall take such reasonable actions necessary to confirm that the project has been completed according to the approved plans and specifications. Upon the determination of the executive administrator that the conservation project approved by the board has been constructed in accordance with the approved plans and specifications, the executive administrator shall issue a certificate of approval to the approved applicant. After issuance of a certificate of approval, the approved applicant shall release all remaining retainage under the contract documents.     
      (f) Approval of plans and specifications, contract documents, and project inspection shall not subject the State of Texas to any liability related to the construction of the project.     
     Source Note:        The provisions of this §367.12 adopted to be effective March 9, 2004, 29 TexReg 2362; amended to be effective July 6, 2004, 29 TexReg 6348