WILLIAM DONALD SCHAEFER, Governor                   Ch. 399

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:

Article - State Finance and Procurement

11-136.2.

(a)  (1) In a Department of Transportation or Maryland
Transportation Authority construction or reconstruction contract,
in order to have retained funds paid to an escrow agent, a
contractor, the contractor's escrow agent, and the contractor's
surety must execute an escrow agreement form to be submitted to
the Department of Transportation or the Maryland Transportation
Authority for approval.

(2)  (i) The contract shall define the escrow agent.

(ii) The escrow agreement form shall contain
the complete address of the escrow agent and surety.

(3)  The executed escrow agreement authorizes the
Department of Transportation or the Maryland Transportation
Authority to make payment of retained funds to the escrow agent.

(b)  If a contractor elects to utilize the escrow account
procedure described in this section, the contractor shall
indicate the election in the space provided on the proposed
documents. If the contractor fails to indicate an election or
refuses the election, the contractor shall forfeit rights to the
use of the escrow account.

(c)  (1) Except as provided in paragraph (2) of this
subsection, and if federal regulations permit application of this
requirement to federally funded projects without jeopardy to
timely recovery of federal funds, the Department of
Transportation or the Maryland Transportation Authority shall pay
to the escrow agent the funds retained.

(2)  Funds withheld for lack of progress or other
contractor violations on the part of the contractor may not be
paid to the escrow agent.

(3)  The escrow agent, in accordance with the
stipulations contained in the escrow agreement may:

(i) Invest the funds paid into the account; and

(ii) Pay earnings on the investments to the
contractor to the extent the contractor is entitled to the
retainage under subsection (d)(2)(ii) of this section.

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