TITLE 43. TRANSPORTATION

PART 1. TEXAS DEPARTMENT OF TRANSPORTATION

CHAPTER 10. ETHICAL CONDUCT BY ENTITIES DOING BUSINESS WITH THE DEPARTMENT

SUBCHAPTER A. GENERAL PROVISIONS

43 TAC §10.6

The Texas Department of Transportation (department) proposes amendments to §10.6, concerning Conflict of Interest.

EXPLANATION OF PROPOSED AMENDMENTS

Amendments to §10.6, Conflict of Interest, make several changes to clarify the circumstances in which a conflict of interest arises for certain entities doing business with the department.

Amendments to §10.6(a) revise the description of the circumstances for the existence of a conflict of interest to align it with the description of the term used in other chapters of the department's rules. These amendments are needed in order to provide a fair and unbiased contracting system and to ensure high standards of ethics and fairness in the administration of the department's programs.

Senate Bill 533, 85th Legislature, Regular Session, 2017, amended restrictions on employment for former state employees who participate on behalf of a state agency in a procurement or contract negotiation to apply for two years after a contract is signed or the procurement is terminated or withdrawn, instead of two years after the employee leaves state employment. To address that statutory change, amendments to §10.6(b)(3) revise the period of a conflict of interest for a for-profit entity that hires a former department employee who participated on behalf of the department in a procurement or negotiation of a contract awarded to the entity. Currently, §10.6 restrictions on the employment of certain former department employees apply unless more than two years have elapsed since the cessation of employment with the department. As amended, the restrictions apply unless more than two years have elapsed since the contract was signed. Amendments to §10.6(b)(3) and (g) also clarify that the conflict of interest only applies to an entity to which a contract was awarded.

Amendments to §10.6(e) update the name of a division of the department.

FISCAL NOTE

Brian Ragland, Chief Financial Officer, has determined that for each of the first five years in which the amendments as proposed are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the amendments.

Ms. Kristin Alexander, Director, Compliance Division, has certified that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the amendments.

PUBLIC BENEFIT AND COST

Ms. Alexander has also determined that for each year of the first five years in which the sections are in effect, the public benefit anticipated as a result of enforcing or administering the amendments will be improved integrity in the department's contracting processes. There are no anticipated economic costs for persons required to comply with the sections as proposed. There will be no adverse economic effect on small businesses.

SUBMITTAL OF COMMENTS

Written comments on the proposed amendments to §10.6 may be submitted to Rule Comments, General Counsel Division, Texas Department of Transportation, 125 East 11th Street, Austin, Texas 78701-2483 or to RuleComments@txdot.gov with the subject line "Ethics and Conflict of Interest." The deadline for receipt of comments is 5:00 p.m. on October 16, 2017. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed amendments, or is an employee of the department.

STATUTORY AUTHORITY

The amendments are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department.

CROSS REFERENCE TO STATUTE

Government Code, Section 572.069, as amended by Section 1, Senate Bill 533, 85th Legislature, Regular Session.

§10.6.Conflict of Interest.

(a) For the purposes of this chapter, a conflict of interest is a circumstance arising out of existing or past activities, business interests, contractual relationships, or organizational structure of an entity, in [or a familial or domestic living relationship between a department employee and an employee of the entity, and because of] which:

(1) the entity is or may be unable to give impartial assistance or advice to the department;

(2) [(1)] the entity's objectivity in performing the scope of work sought by the department is or may [might] be otherwise impaired; [affected; or]

(3) the entity has an unfair competitive advantage;

(4) [(2)] the entity's performance of services on behalf of the department or participation in an agreement with the department provides or may [reasonably appear to] provide an unfair competitive advantage to [the entity or to] a third party; or[.]

(5) there is a reasonable perception or appearance of impropriety or unfair competitive advantage benefiting the entity or a third party as a result of the entity's participation in an agreement with the department.

(b) A for-profit entity, including a sole proprietorship, has a conflict of interest if:

(1) an individual who held a position at or above the level of district engineer, division director, or office director solicits business from or attempts to influence a decision of the commission or department on behalf of that entity within one year after the date of the individual's separation from the department;

(2) a former department employee whose last salary from the department was at or above the minimum amount prescribed for salary group A17 of the state position classification salary schedule performs work on behalf of that entity regarding a specific investigation, application, request for ruling or determination, contract, claim, or judicial or other proceeding in which the former employee participated, whether through personal involvement or within the former employee's official responsibility, while employed by the department; or

(3) the entity employs a former department employee who participated on behalf of the department in the procurement or negotiation of an awarded [procurement or] contract [negotiation], for which the entity was the prime contractor or an equity partner of the prime contractor, unless more than two years have elapsed since the date that the contract was signed. cessation of employment with the department.]

(c) Subsection (b)(1) of this section does not apply to a position that is designated as an interim position.

(d) For the purpose of subsection (b)(2) of this section, an individual participated in a matter if the individual made a decision or recommendation on the matter, approved, disapproved, or gave advice on the matter, conducted an investigation related to the matter, or took a similar action related to the matter.

(e) Before submitting a bid or undertaking some other interaction with the department, a for-profit entity or a former employee of the department to whom subsection (b) of this section applies may request from the department a determination of whether the interaction would constitute a conflict of interest under subsection (b) of this section. Such a request must be made in writing and must contain a concise explanation of the relevant facts. The department will not respond to a request under this subsection before consulting with the [Office of] General Counsel Division. The department will issue a written determination in response to a valid request made under this subsection as soon as practicable.

(f) Subsection (b)(3) of this section applies only to an entity's employment of an individual whose participation in a procurement or contract negotiation occurs on or after September 1, 2015. Subsection (b)(3) does not apply to a contract awarded under a low-bid process.

(g) For purposes of subsection (b)(3) of this section, a person participated in the [an awarded] procurement or [contract] negotiation of an awarded contract only if the person played an active part in the original procurement or contract negotiation with the prime contractor or equity partner of the prime contractor by personally approving or performing a step that was materially relevant in the original procurement or contract negotiation process. An action is materially relevant if the action provides an opportunity to steer a contract toward a particular vendor, or involves the negotiation of price or contract terms with a vendor or the approval of negotiated prices or terms. Handling administrative matters and performing ministerial duties are not materially relevant steps.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703460

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630


CHAPTER 21. RIGHT OF WAY

SUBCHAPTER I. REGULATION OF SIGNS ALONG INTERSTATE AND PRIMARY HIGHWAYS

The Texas Department of Transportation (department) proposes the repeal of §§21.146 - 21.149, 21.151, 21.165, 21.194, 21.196, and §§21.251 - 21.260; amendments to §§21.141 - 21.145, 21.150, 21.152 - 21.156, 21.158 - 21.164, 21.166 - 21.182, 21.184 - 21.193, 21.195, and §§21.197 - 21.204; and new §21.205 and §21.206, all concerning regulation of signs along Interstate and primary highways.

EXPLANATION OF PROPOSED REPEALS, AMENDMENTS, AND NEW SECTIONS

The Texas statutes regulating outdoor advertising were ruled unconstitutional by the Third Court of Appeals in AusPro v. TxDOT, 506 S.W.3d 688 (2016) (Tex.App.--Austin 2016, pet. filed). The court held that Texas Transportation Code, Chapter 391, Subchapters B and C were unconstitutional because the definition of "sign" was over inclusive, making it impossible for the court to determine which provisions applied to commercial speech and which applied to noncommercial speech. This decision is on appeal to the Texas Supreme Court.

The Texas Legislature passed Senate Bill No. 2006, 85th Legislature, Regular Session, 2017, to address the decision of AusPro. The bill removes the unconstitutional issue from the statute by replacing outdoor advertising with commercial sign. The statute defines commercial sign to mean a sign that is intended to be leased, or for which payment of any type is intended to be received. This new definition makes it clear that the regulations only affect commercial speech and not a person's First Amendment right of freedom of speech. This statutory change addresses the court's decision by eliminating the need for a review of the content of the sign to make the determination of whether the sign is regulated. The new provisions require the department to regulate commercial signs in a content neutral manner. These statutory changes required similar changes to the department's rules. Throughout the rules, the terms "outdoor advertising" and "sign" have been replaced with "commercial sign" to correspond with the statutory change.

Senate Bill No. 312, 85th Legislature, Regular Session, 2017 amended §391.038, to legalize the height of all signs as they existed on March 1, 2017, up to a height of 85 feet, and allows those signs to be maintained at that height without the need of an amended permit. This change to the height restriction required the department to take a look at the current maximum height requirement to determine how to address the discrepancy between signs erected in violation of the current rules, those that had complied with the maximum height and those that will be built in the future.

In addition, these rules include changes to address new department procedures, including the new online application process, and merge the two divisions of Chapter 21 (Division 1, Signs, and Division 2, Electronic Signs) to eliminate repetition and confusion. The word "division" has been replaced with "subchapter" throughout the amended rules to reflect the merger of the divisions.

Almost every rule regarding the Highway Beautification program has been amended to address either the statutory changes, the new streamlined procedures, or the merging of the rules on electronic signs; however, due to the pending Texas Supreme Court ruling on Auspro, the department also notes that any rule in Chapter 21, Subchapter I, not amended or repealed by this rulemaking continues in effect under new Transportation Code, Chapter 391.

Amendments to §21.141, Purpose, replace the term "division" with "subchapter" and "outdoor advertising" with "commercial signs" to address the changes necessary to implement SB 2006 and to reflect the elimination of Chapter 21, Subchapter I, Division 2, Electronic Signs. With the elimination of the electronic sign division there is no longer a need for references to divisions in this subchapter. The rules under the electronic sign division have been merged into the general rules. All the rules under this subchapter apply to electronic signs unless noted in the specific rule.

Amendments to §21.142, Definitions, add definitions for "commercial sign," "conforming sign," "electronic sign," "lawfully erected," "stacked sign," and "zoned commercial or industrial area." These terms are used throughout the chapter and the department has determined that providing clear definitions will benefit the regulated community. The definition for "commercial sign" follows that of the language of new Transportation Code, §391.001. This new definition will ensure that the department is not regulating speech. The definition for "electronic sign" has been moved without change from Division 2.

In addition the department has clarified the definitions for several terms. These changes will give the regulated entities a better understanding of the department's use of these terms. The definition of "highway" was amended to include a roadway project for which the Texas Transportation Commission (commission) has authorized the purchase of right of way. With this change the department believes that we have clearly stated the time the highway is subject to sign regulations. The definition of "public park" was replaced with "public space" to include additional areas that are similar in nature to a public park.

Amendments to §21.143, Permit Required, conform to use of the term "commercial signs."

Amendments to §21.144, License Required, require the licensee to notify the department of any change to their contact information within 30 days of the change. This will provide the department with the information needed to contact the licensee for future notices.

Amendments to §21.145, Prohibited Signs, provide that a sign may not be erected or maintained on the real property of another without the property owner's permission. The property owner's permission is currently a requirement of the sign permit application. With the new online application process, the department no longer will require the property owner's signature and this change clarifies that the property owner's permission is still required. In addition, the amendments add a reference to Transportation Code §393.002, regarding the prohibition of commercial signs in the state right of way

Section 21.146, Exempt Signs, is repealed to comply with SB 2006. Because the changes result in only commercial signs being regulated under the department's Highway Beautification program, the exemption of various types of non-commercial signs is no longer needed.

Section 21.147, On-premise Sign, is repealed to comply with the changes to the statute by SB 2006. The distinction between on-premise and off-premise signs is not used under SB 2006 amendments to Transportation Code, Chapter 391. The statute now requires the regulation of commercial signs only. Under the definition of "commercial sign," signs that would have been previously classified as "on-premise" are excluded from regulation.

Section 21.148, Exception to License Requirement for Nonprofit Signs, is repealed as unnecessary under SB 2006. Nonprofit signs do not meet the definition of commercial signs and therefore, are not regulated.

Section 21.149, Nonprofit Sign Permit, is repealed as unnecessary under SB 2006.

Amendments to §21.150, Continuance of Nonconforming Commercial Signs, remove references to nonprofit signs and clarify that a nonconforming sign must be maintained in accordance with the current permit to be eligible for renewal. This change makes it clear that the sign must continue to match the provisions of the permit to hold its nonconforming status and conforms the rules to the department's current procedures.

Section 21.151, Time Proposed Roadway Becomes Subject to Division, is repealed to simplify the time that an existing sign comes under these regulations. The definition of "highway" was amended to include a roadway project for which the commission has authorized the purchase of right of way. With the change to the definition, this section is not needed.

Amendments to §21.152, License Application, address changes necessary to implement the new online application process. The changes require the applicant provide the applicant's email address and remove the requirement that the application be signed and notarized. The department has developed an online system to streamline the application and renewal process and the changes were necessary to implement the new process. The rules continue to provide for a written application that is mailed to the department and language is added to address the requirements for the mailed application.

Amendments to §21.153, License Issuance, provide the licensee the ability to amend a license by filing an amended application. This change streamlines the process for the department to receive updated information from the licensee.

Amendments to §21.154, License Not Transferable, merely replace the term "division" with "subchapter" to reflect the elimination of divisions within Chapter 21.

Amendments to §21.155, License Renewals, clarify that a license must be renewed annually. The department is now requiring that the license renewal application be provided to the department by the 15th day of the month in which it expires. Language is also added to clarify the fee for late renewals. The current rules include the $100 fee for renewals that are received within 45 days of the expiration but the language is only included in §21.156 regarding the fees. The department is adding the language to this section to make it clear that the department does accept late renewals if received within 45 days of the expiration. In addition changes are made to accommodate the online renewal process by eliminating the need for signatures.

Amendments to §21.156, License Fee, add credit cards to the types of payments accepted to accommodate the new online system. The changes also remove the 20-day requirement for the provision of a renewal notification. The section still requires the second renewal notification but no longer requires it within 20 days. With the new system and the use of email the department believes this requirement is not necessary.

Amendments to §21.158, License Revocation, update an amended section heading and require a request for an administrative hearing to be sent to the address listed on the enforcement notice. This change will eliminate the misdirection of these requests and allow for a timely filing of the administrative action.

Amendments to §21.159, Permit Application, make changes necessary to address the online application process. The online application requires removal of original signatures and notarization for the online application. These requirements are still applicable to a paper application. The department is also now accepting credit card payment through the online system and that change is also reflected in this section. The additional requirements for an electronic sign have been moved unchanged from §21.253, Issuance of Permits, and §21.258, Emergency Information.

Amendments to §21.160, Applicant's Identification of a New Commercial Sign's Proposed Site, address issues relating to identification of the sign. The department has noticed that on occasions there have been discrepancies between permit application location and the stake or identifying mark placed at the sign location. The changes clarify that the stake must be on the parcel of land indicated on the application. If the wrong parcel has been identified, the department may not have the required land owner information.

Amendments to §21.161, Site Owner's Consent; Withdrawal, make the changes necessary to address the online application process. The amendments also replace the term "division" with "subchapter" to address the changes necessary to reflect the elimination of divisions within Chapter 21 and adds "commercial" immediately before "sign" to implement SB 2006.

Amendments to §21.162, Permit Application for Certain Preexisting Commercial Signs, provide additional guidance on the process for addressing preexisting signs. The section currently requires a sign owner to apply for a permit upon notification that the highway is about to come under the program, but the section does not state the consequences for failure get the permit. The amendments provide that failure to obtain the permit will result in the department issuing an order of removal. In addition, the amendments provide that the department may issue a non-conforming permit if the sign does not meet the current regulations. This is the process the department currently follows and the language was added to give the sign owner's notice of the process.

Amendments to §21.163, Permit Application Review, address the issues related to a paper application. The department reviews permit application in the order received, however the department wants to make it clear that the application must be complete to hold its priority place. The timing of a permit application submission might affect the sign's location eligibility. The department does not want a licensee using the application process to hold sign locations. In addition, new language provides that the department will notify the applicant if the application is not accepted as complete. The department will not return a copy of the application. This requirement is not necessary with the new online process.

Amendments to §21.164, Decision on Application, remove language that required the department to notify the land owner if the sign application was denied. The department is not involved in the relationship between the applicant and land owner and has found this requirement to be unnecessary. Changes also address the discontinuation of the permit plate and to be consistent with the changes to §21.163, Permit Application Review.

Section 21.165, Sign Permit Plate, is repealed, as the permit plate is an outdated method of identifying and connecting the permit to the particular sign. With the new online system and electronic inventory, the department does not need to view the permit plate to access the permit for the sign. The department is now able to access that information by electronic location information.

Amendments to §21.166, Commercial Sign Location Requirements, provide new direction on when the department will determine a location unavailable due to a pending construction project. If the department has received environmental clearance for a construction project, the department will not approve a location that will be within that project's boundaries. The department believes that a project with environmental clearance is advanced enough to prohibit the erection of a new sign that will have to be removed to accommodate the project. This will eliminate the expense of erecting a sign that will need to be removed once the construction project begins. In addition, provisions from §21.155, Location, have been added to this section to address the required changes to combine the two divisions. The language is unchanged except for non-substantive editing changes made to accommodate the new section.

Amendments to §21.167, Erection and Maintenance from Private Property, to Permit, add the word "commercial" immediately before "sign" to implement SB 2006 and change "licensee" to "license holder" for consistency with other rules in this chapter.

Amendments to §21.168, Conversion of Certain Authorization to Permit, removes the reference to the permit plate to address the repeal of §21.165, Sign Permit Plate.

Amendments to §21.169, Notice of Commercial Sign Becoming Subject to Regulations, require the sign owner to obtain a permit for the sign within 60 days of the notification of a sign becoming subject to Transportation Code, Chapter 391. The amendments provide that if the sign owner fails to obtain the permit or if the sign owner cannot be located, the department will initiate a removal action. Without this language it was difficult to determine when the department will proceed to the removal stage.

Amendments to §21.170, Appeal Process for Permit Denials, address electronic means of filing the appeal. The section currently requires an appeal request to be mailed to the executive director. The amendments provide that the request will go through to the Right of Way Division and allow the request to be emailed. The amendments delete the requirement of submitting a copy of the application as it is unnecessary for the review process. Subsection (d) is deleted as the department is able to process the appeal within 60 days of receipt, so the language requiring notification of a delay is not necessary.

Amendments to §21.171, Permit Expiration, merely replace the term "division" with "subchapter" to reflect the elimination of divisions within Chapter 21.

Amendments to §21.172, Permit Renewals, provide a clear requirement that the permit must be renewed prior to the expiration date, that by filing the renewal the permit holder is asserting that the sign meets all requirements, and that the issuance of the renewal does not indicate that the department has determined that the sign continues to meet all requirements. The department has experienced enforcement complications by issuing renewals without annually verifying the signs compliance with all requirements. The department does not have the necessary staff to review each sign prior to the annual renewal and wants to expressly provide that the issuance of the renewal is not evidence of the department's approval changes made to the sign since the last inspection. Language is also added to accommodate the new electronic application process. In addition language is added to make it clear that the department will not renew the permit if the permit holder has not demonstrated an identifiable access route from private property. This change is needed to address the continual use of highway right of way for the maintenance of the signs.

Amendments to §21.173, Transfer of Permit, address the new online application process. Subsections (e) and (f) regarding nonprofit signs have been deleted as these types of signs no longer fall within the regulation of the program.

Amendments to §21.174, Amended Permit, address the new online application process. Language has been added to provide that if the changes approved by the amended permit are not completed within one year after the date that the amended permit is issued, the permit holder must reapply. This change brings the amended permit in line with the current requirement that the sign to be erected within one year of initial issuance of a permit for the permit to be eligible for renewal. In addition, changes clarify that the structure, as built, must be as approved by the department and changes to size, height, or configuration cannot be made without an amended permit. An amended permit cannot be used to change the location of the sign. A change of location requires a new permit application because the change could affect other applications under review and may require the department to get new land owner information. Language is added to describe the additional requirements for obtaining an amended permit for conversion to an electronic sign. This change makes it clear that the approval of the city in which the sign is located is required for this type of amended permit.

Amendments to §21.175, Permit Fees, make the necessary changes to address the deletion of Division 2 regarding electronic signs, the removal of non-profit signs from the program and the new online application and renewal process. With the repeal of Division 2 regarding electronic signs the language regarding the fees for electronic sign permit is not necessary and has been removed. The fees for both static and electronic permits are the same. The late fee is clarified by adding language that states it is owed if the fee is not received prior to the expiration date. There has been some confusion as to when the late fee was required which should be clarified by the new language.

Amendments to §21.176, Cancellation of Permit, clarify when a permit will be cancelled. Language is added to clarify that the permit will be cancelled if the sign is accessed, erected, repaired or maintained from the right of way. The current language created an additional obstacle for enforcement by stating that the sign could not be accessed from private property. The department does not need to prove that there were no available private property accesses only that right of way was used. In addition, a new cancellation provision is added for failure to pay an administrative penalty charged. If a sign owner refuses to pay the administrative penalty for a sign violation, the next action by the department will be to cancel the permit. The department must be able to enforce the administrative penalties to improve compliance with the rules.

Due to confusion, language regarding notification of the violation and opportunity to cure the violation has been moved from §21.176 to new §21.205, Curable Commercial Sign Permit Violations. The department's enforcement actions have been challenged because the language currently says the department may cancel the permit. With the change to the new section the department is making it clear that failure to cure the violation as requested will result in cancellation. The landowner notification is deleted from §21.176, as the department has found this to be unnecessary.

Amendments to §21.177, Commercial or Industrial Area, merely replace the term "division" with "subchapter" to address the changes necessary to reflect the elimination of divisions within Chapter 21.

Amendments to §21.178, Zoned Commercial or Industrial Areas, merely replace the term "outdoor advertising" with "commercial signs" to address the changes necessary to implement SB 2006.

Amendments to §21.179, Unzoned Commercial or Industrial Areas, merely replace the term "division" with "subchapter" to address the changes necessary to reflect the elimination of divisions within Chapter 21.

Amendments to §21.180, Commercial or Industrial Activity, revise "division" and "outdoor advertising" and uses the defined term "public space" in the place of recreational facility.

Amendments to §21.181, Abandonment of Sign, streamline the process for determining if a sign has been abandoned. The current rules provide that to be abandoned a sign must be without content for one year, overgrown by vegetation, or need repairs. The amendments remove the one year requirement for advertising or copy because it is essentially a restatement of the legible content requirement and is an impediment to enforcement. The department does not inventory every sign every year. A sign could be in the state of abandonment for some time before identified by the department and having to show that the sign was in the same state for one year from the time of the initial review creates unnecessary delay. The department has found that having pictures of the sign on four separate dates without copy has not been beneficial in establishing abandonment of the sign and this language has been removed. Subsection (e), regarding the availability of the location, is deleted as unnecessary. If the sign permit is cancelled, the availability of the location for a new sign permit would be determined under the general location provisions. Subsection (h) is moved to new §21.205, Curable Commercial Sign Permit Violations. Section 21.205 provides the same 60 day notice and cure provisions that currently are in subsection (h).

Amendments to §21.182, Commercial Sign Face Size and Position, provide that an electronic sign may have two electronic sign faces but only if the faces are facing different directions. This requirement is moved from §21.155, Location, to accommodate the combining of the two divisions of this subchapter.

Amendments to §21.184, Location of Commercial Signs Near Public Spaces, replace "public park" with the newly defined term "public space."

Amendments to §21.185, Location of Commercial signs Near Certain Facilities, add the word "commercial" to the title of the section to make it consistent with the new terminology of these rules.

Amendments to §21.186, Location of Signs Near Right of Way, change the title of the section to make it consistent with the new terminology of these rules and to clarify the section applies only to state-held right of way.

Amendments to §21.187, Spacing of Commercial Signs, delete subsection (h), providing exceptions for on-premise, directional, and official signs, as unnecessary because the amended rules apply only to commercial signs.

Amendments to §21.188, Wind Load Pressure, delete the requirement that the certification be signed to accommodate the new online application process.

Amendments to §21.189, Commercial Sign Height Restrictions, implement the provisions of SB 312 regarding the height of commercial signs in existence on March 1, 2017. SB 312 added new Transportation Code §391.038, Sign Height, which states that a sign existing on March 1, 2017, may not be higher than 85 feet, excluding cut outs. Language was also added to allow signs that a sign owner could rebuild a sign that was in existence on March 1, 2017,without obtaining an amended permit provided that the sign was rebuilt at the same location and at a height that does not exceed the height the sign was on March 1, 2017. This change will not affect any signs erected after March 1, 2017. All new commercial signs will have to comply with the existing 42-1/2 maximum height. In addition, these provisions allow a sign that is 85 feet or less on March 1, 2017,be rebuilt to the exact provisions of the current sign permit with exception of the height without obtaining an amended permit. Because SB 312 relates only to height an applicable sign that is nonconforming on a basis other than height remains nonconforming. If a conforming sign owner wants to change the number of faces, lighting or other physical aspects of the sign an amended permit would be required.

Amendments to §21.190, Lighting and Movement on Commercial Signs, add provisions that were in Chapter 21, Division 2 regarding electronic signs. The amendments add no new lighting restrictions. The changes were necessary to address merger of the two divisions of Chapter 21.

Amendments to §21.191, Repair and Maintenance of commercial Signs, clarify that routine maintenance includes changing all parts of the sign structure, and not just the sign face, if the same type of materials are used. A reference to Transportation Code, §391.038, regarding the sign height requirements, is included to implement SB 2006. The statute provides that a sign existing on March 1, 2017, can remain at the height on that date up to 85 feet, regardless of the maximum height set by rule. The statute also provides an exception to obtaining an amended permit and therefore, a reference to that exception is needed in this rule.

Amendments to §21.192, Permit for Relocation of a Commercial Sign, require that a sign must be timely removed from the construction site to be eligible for the relocation provisions. Signs that remain in the construction area or that must be removed by the department are an added expense to the department. The relocation provisions are a benefit to the sign owner; however, the department believes the sign owner must meet its obligations to be eligible for this benefit. The language regarding waiving the permit fee is also removed. The relocation application requires the same amount of review as a new permit and therefore, to maintain the revenue neutral aspect of the program, the fee needs to be charged for this permit.

Amendments to §21.193, Location of Relocated Commercial Sign, replace "public park" with "public space." References to on-premise signs have been removed to comply with S.B. 2006. The amendments delete the requirement that a sign must be relocated to the same parcel of land and the requirement's exception has been removed. The department finds this restriction to be an unnecessary step in the relocation approval process. Under the amended rule a sign owner is able to find a new location that meets the requirements without having to demonstrate that the current parcel in not feasible for use.

Section 21.194, Construction and Appearance of Relocated Sign, is repealed as unnecessary. The necessary provisions of this section are addressed under the permit requirements. The department has not found a benefit in requiring the same materials be used in the new sign. An eligible sign permit can be amended to allow for different sign faces, lighting, and other features and by prohibiting these changes from this permit process is unnecessary.

Amendments to §21.195, Relocation of Commercial Sign with Certified Cities, replace "municipality" with "certified cities" in the section heading to clarify that the section applies to municipalities that are approved as certified cities under §21.200. Subsection (b) is deleted as the relocation benefits are an aspect of the purchase of the right of way and not handled the Highway Beautification Program.

Section 21.196, Relocation Benefits, is repealed as relocation benefits are an aspect of the purchase of the right of way and not the sign permit process.

Amendments to §21.197, Discontinuance of Nonconforming Commercial Sign Due to Destruction, provide for the provisions of SB 312 by adding a reference to Transportation Code, §391.038.

Amendments to §21.198, Order of Removal, provide that the department will notify the land owner of the removal requirement if the sign owner cannot be determined. This is needed for the instances in which the sign owner is no longer operating and cannot be identified. The land owner will then be responsible for the sign on the land owner's property.

Amendments to §21.199, Destruction of Vegetation and Access from Right of Way Prohibited, merely replace "division" with "subchapter."

Amendments to §21.200, Local Control of Commercial Signs, add a reference to a certified city for clarification and to use the term commonly used by the department when referring to cities that have been granted local control.

Amendments to §21.201, Fees Nonrefundable, and §21.202, Property Right Not Created, merely replace "division" with "subchapter."

Amendments to §21.203, Complaint Procedures, replace "outdoor advertising" with "highway beautification" and "sign" to address the changes required under SB 2006.

Amendments to §21.204, Administrative Penalties for Commercial Signs, remove the penalties for no permit plate because permit plates are no longer required and revise the wording of the violation for improper placement of a sign to conform to the requirements of §21.160. Subsection (d) is deleted and replaced with subsection (g) for clarity and to conform to other provisions in rules related to cancellation of a permit.

New §21.205, Curable Commercial Sign Permit Violations, is added to address confusion caused by §21.176, Cancellation of Permit. The department has identified problems with the regulated community's understanding when a notice provides a right to cure a violation. This new section provides the department with a separate action prior to the cancellation notification. If the sign owner fails to cure the violation, department will move to the cancellation provisions of §21.176, Cancellation of Permits. The department believes that providing all of the violations that can be corrected in one section will be clearer to the affected industry.

New §21.206, Requirements for An Electronic Sign, gathers provisions from various sections of Division 2 of Chapter 21, Subchapter I. The department has found that having the two divisions has led to confusion in the regulated community. Division 2 provided additional provisions for electronic signs, while each rule in Division 1 applied to an electronic sign unless the rule was in direct conflict with a provision of Division 2. Whether a provision was in direct conflict was subject to varying interpretations. With the merging of the two divisions, the department has clarified the electronic sign process. This new section does not add new requirements but rather revises current §21.257, Requirements, §21.258, Emergency Information, and §21.259, Contact Information.

Division 2, Electronic Signs; §§21.251 - 21.260, is repealed and the content of the sections in the division are merged into the appropriate commercial sign provisions of the amended rules for clarity and ease of understanding by the regulated community.

FISCAL NOTE

Brian Ragland, Chief Financial Officer, has determined that for each of the first five years in which the repeals, amendments, and new sections as proposed are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the repeals, amendments, and new sections.

Mr. Gus Cannon, Right of Way Division Director, has certified that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the repeals, amendments, or new sections.

PUBLIC BENEFIT AND COST

Mr. Cannon has also determined that for each year of the first five years in which the sections are in effect, the public benefit anticipated as a result of enforcing or administering the revisions will be the continuation of the Highway Beautification Program in compliance with federal requirements and consistent enforcement to the regulated community. There are no anticipated economic costs for persons required to comply with the sections as proposed. There will be no adverse economic effect on small businesses.

PUBLIC HEARING

Pursuant to the Administrative Procedure Act, Government Code, Chapter 2001, the Texas Department of Transportation will conduct a public hearing to receive comments concerning the proposed rules. The public hearing will be held at 9:00 a.m. on September 26, 2017, in the Ric Williamson Hearing Room, First Floor, Dewitt C. Greer State Highway Building, 125 East 11th Street, Austin, Texas and will be conducted in accordance with the procedures specified in 43 TAC §1.5. Those desiring to make comments or presentations may register starting at 8:30 a.m. Any interested persons may appear and offer comments, either orally or in writing; however, questioning of those making presentations will be reserved exclusively to the presiding officer as may be necessary to ensure a complete record. While any person with pertinent comments will be granted an opportunity to present them during the course of the hearing, the presiding officer reserves the right to restrict testimony in terms of time and repetitive content. Organizations, associations, or groups are encouraged to present their commonly held views and identical or similar comments through a representative member when possible. Comments on the proposed text should include appropriate citations to sections, subsections, paragraphs, etc. for proper reference. Any suggestions or requests for alternative language or other revisions to the proposed text should be submitted in written form. Presentations must remain pertinent to the issues being discussed. A person may not assign a portion of his or her time to another speaker. Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services such as interpreters for persons who are deaf or hearing impaired, readers, large print or Braille, are requested to contact the General Counsel Division, 125 East 11th Street, Austin, Texas 78701-2483, (512) 463-8630 at least five working days before the date of the hearing so that appropriate services can be provided.

SUBMITTAL OF COMMENTS

Written comments on the proposed repeal of §§21.146 - 21.149, 21.151, 21.165, 21.194, 21.196, and §§21.251 - 21.260; amendments to §§21.141 - 21.145, 21.150, 21.152 - 21.156, 21.158 - 21.164, 21.166 - 21.182, 21.184 - 21.193, 21.195, and §§21.197 - 21.204; and new §21.205 and §21.206, may be submitted to Rule Comments, General Counsel Division, Texas Department of Transportation, 125 East 11th Street, Austin, Texas 78701-2483 or to RuleComments@txdot.gov with the subject line "Commercial sign rules." The deadline for receipt of comments is 5:00 p.m. on October 16, 2017. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed revisions, or is an employee of the department.

DIVISION 1. SIGNS

43 TAC §§21.141 - 21.145, 21.150, 21.152 - 21.156, 21.158 - 21.164, 21.166 - 21.182, 21.184 - 21.193, 21.195, 21.197 - 21.206

STATUTORY AUTHORITY

The amendments and new sections are proposed under Transportation Code, §201.101, which provides the commission with the authority to establish rules for the conduct of the work of the department, and more specifically, Transportation Code, §391.032, which provides authority to establish rules to regulate the orderly and effective display of commercial signs on primary roads, Transportation Code, §391.0355, which provides authority for the commission to set fees for administrative penalties in association with violation of commercial sign regulations; Transportation Code, §391.065, which provides authority to establish rules to standardize forms and regulate the issuance of commercial sign licenses; and Transportation Code §391.068, which provides authority for the commission to prescribe permit requirements and set fees for commercial sign permits.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapters 391.

§21.141.Purpose.

This subchapter [division] is established to regulate the orderly and effective display of commercial signs [outdoor advertising] along a regulated highway within the State of Texas.

§21.142.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Commercial sign--A sign that is:

(A) at any time intended to be leased, or for which payment of any type is intended to be or is received, for the display of any good, service, brand, slogan, message, product, or company, except that the term does not include a sign that is leased to a business entity and located on the same property on which the business is located or is smaller than 50 square feet; or

(B) located on property owned or leased for the primary purpose of displaying a sign.

(2) [(1)] Commission--The Texas Transportation Commission.

(3) Conforming sign--A sign legally erected and maintained in accordance with state and federal law, including rules and regulations.

(4) [(2)] Department--The Texas Department of Transportation.

(5) Electronic sign--A commercial sign that changes its message or copy by programmable electronic or mechanical processes.

(6) [(3)] Erect--To construct, build, raise, assemble, place, affix, attach, embed, create, paint, draw, or in any other way bring into being or establish.

(7) [(4)] Freeway--A divided, controlled access highway for through traffic. The term includes a toll road.

(8) [(5)] Highway--The width between the boundary lines of either a publicly maintained way any part of which is open to the public for vehicular travel or roadway project for which the commission has authorized the purchase of right-of-way.

(9) [(6)] Interchange--A junction of two or more roadways, including frontage roads with on and off ramps, in conjunction with one or more grade separations that provides for the uninterrupted movement of traffic between two or more roadways or highways on different levels without the crossing of traffic streams.

(10) [(7)] Intersection--The common area at the junction of two highways that are on the primary system. The common area includes the area within the lateral boundary lines of the roadways.

(11) [(8)] Interstate highway system--Highways designated officially by the commission and approved pursuant to 23 United States Code §103 as part of the national system of interstate and defense highways.

(12) Lawfully erected--Erected before January 1, 1968 or if erected after January 1, 1968, erected in compliance with law, including rules, in effect at the time of erection.

(13) [(9)] License--A commercial sign [An outdoor advertising] license issued by the department.

(14) [(10)] Main-traveled way--The traveled way of a highway that carries through traffic. In the case of a divided highway, the traveled way of each of the separate roadways for traffic in opposite directions is a main-traveled way. It does not include such facilities as frontage roads, turning roadways, or parking areas.

(15) [(11)] Military Service Member--A person who is currently serving in the Armed Forces of the United States, in a reserve component of the United States, including the National Guard, or in the state military service of any service.

(16) [(12)] Military spouse--A person who is married to a military service member who is currently on active duty.

(17) [(13)] Military veteran--A person who has served in the Army, Navy, Air Force, Marine Corps, or Coast Guard of the United States, or in an auxiliary service of one of those branches of the armed forces.

(18) [(14)] National Highway System--Highways designated officially by the commission and approved pursuant to 23 United States Code §103 as part of the national highway system.

(19) [(15)] Nonconforming sign--A sign that was lawfully erected but that no longer complies with a law or rule because of changed conditions or because the law or rule was amended after the sign was erected or that fails to comply with a law enacted or rule adopted after the sign was erected. Examples of changed conditions are discontinuance of a commercial or industrial activity, decrease in the limits of an incorporated area, reclassification of a roadway, decertification of certified city, and amendment of a comprehensive local zoning ordinance from commercial to residential.

[(16) Nonprofit sign--A sign that is erected and maintained by a nonprofit organization under a permit issued under §21.149 of this division (relating to Nonprofit Sign Permit).]

(20) [(17)] Permit--Written authorization granted for the erection of a commercial sign, subject to this subchapter and Transportation Code, Chapter 391.

(21) [(18)] Person--An individual, association, partnership, limited partnership, trust, corporation, or other legal entity.

(22) [(19)] Primary system--Highways designated by the commission as the federal-aid primary system and any highway on the National Highway System. The term includes all roads designated as part of the National Highway System as of 1991.

(23) [(20)] Processing Area--An area where actions or operations are accomplished that contribute directly to a particular commercial or industrial purpose and are performed during established activity hours.

(24) [(21)] Public space--Publicly-owned land that is designated as a park, forest, playground, scenic area, recreation area, wildlife or waterfowl refuge, historic site, or similar public space. [park--A public park, forest, playground, nature preserve, or scenic area designated and maintained by a political subdivision or governmental agency.]

(25) [(22)] Regulated highway--A highway on the interstate highway system or primary system.

(26) [(23)] Rest area--An area of public land designated by the department as a rest area, comfort station, picnic area, or roadside park.

(27) [(24)] Roadway--That portion of a road used for vehicular travel, exclusive of the sidewalk, berm, or shoulder.

(28) [(25)] Sign--A structure, display, light, device, figure, painting, drawing, message, plaque, placard, poster, billboard, logo, or symbol that is designed, intended, or used to advertise or inform. [An object that is designed, intended, or used to advertise or inform, including a sign, display, light, device, figure, painting, drawing, message, plaque, placard, poster, billboard, logo, or symbol.]

(29) [(26)] Sign face--The part of the sign that contains [advertising or] information and is distinguished from other parts of the sign, including another sign face, by borders or decorative trim. The term does not include a lighting fixture, apron, or catwalk unless it displays a part of the [advertising or] information contents of the sign.

(30) [(27)] Sign structure--All of the interrelated parts and materials that are used, designed to be used, or intended to be used to support or display [advertising or] information contents. The term includes, at a minimum, beams, poles, braces, apron, frame, catwalk, stringers, and a sign face.

(31) Stacked sign--A sign with two faces placed one above another on a single structure.

(32) [(28)] Visible--Capable of being seen, whether or not legible, or identified without visual aid by a person operating a motor vehicle on the highways of this state. [of normal visual acuity.]

(33) Zoned commercial or industrial area--An area that is established by a zoning authority under state law as being most appropriate for commerce, industry, or trade, regardless of how the area is labeled. Such an area is commonly labeled as commercial, industrial, business, manufacturing, retail, trade, warehouse, or a similar classification.

§21.143.Permit Required.

Except as provided by this chapter, unless a person holds a permit issued under §21.164 of this subchapter [division ] (relating to Decision on Application) or §21.200 of this subchapter [division] (relating to Local Control of Commercial Signs), the person may not erect or maintain a commercial [an outdoor] sign that is:

(1) within 660 feet of the nearest edge of the right of way of a regulated highway if any part of the sign's [advertising or] information content is visible from any place on the main-traveled way of the highway; or

(2) outside of the jurisdiction of an incorporated city and more than 660 feet from the nearest edge of the right of way of a regulated highway if any part of the commercial sign [sign's advertising or information content] is visible from the main-traveled way of the highway and the sign was erected for the purpose of having its [advertising or] information content seen from the main-traveled way of the highway.

§21.144.License Required.

(a) Except as provided by this subchapter [division], a person may not obtain a permit for a commercial sign under this subchapter [division] unless the person holds a currently valid license issued under §21.153 of this subchapter [division] (relating to License Issuance) or under §21.450 of this chapter (relating to License Issuance) applicable to the county in which the sign is to be erected or maintained.

(b) A license is valid for one year from the date of issuance or most recent renewal.

(c) Each license holder shall notify the department not later than the 30th day after the date of a change in the mailing address, telephone number, or email address of the license holder.

§21.145.Prohibited Signs.

(a) A sign may not be erected or maintained on the real property of another without the property owner's permission. [a tree or painted or drawn on a rock or other natural feature.]

(b) A sign may not be erected or maintained within the right of way of a public roadway, as prohibited by Transportation Code, §393.002, or an area that would be within the right of way if the right of way boundary lines were projected across an area of railroad right of way, utility right of way, or road right of way that is not owned by the state or a political subdivision.

(c) A sign may not be erected or maintained on a highway or part of a highway designated under Transportation Code, §391.252.

§21.150.Continuance of Nonconforming Commercial Signs.

(a) Notwithstanding other provisions of this subchapter [division], the department will renew a permit for a nonconforming sign only if the sign structure was lawfully erected and has been maintained in accordance with the permit being renewed.[:]

[(1) was lawful on the later of the date it was erected or became subject to the control of the department; and]

[(2) remains substantially the same as it was on the later of the date it was erected, became subject to the department's control, or became a nonconforming sign.]

(b) A sign that was legally erected before March 3, 1986 in a railroad, utility, or road right of way that is not owned by the state or a political subdivision may be maintained as a nonconforming sign if all other requirements of this subchapter [division ] are met.

(c) A nonconforming sign may not be:

(1) removed and re-erected for any reason, other than a request by a condemning authority; or

(2) substantially changed, as described by §21.191 of this subchapter [division] (relating to Repair and Maintenance of Commercial Signs).

[(d) A nonprofit organization that holds a permit for a nonconforming sign that otherwise qualifies for a permit under §21.149 of this division (relating to Nonprofit Sign Permit) may convert the permit to one issued under that section.]

§21.152.License Application.

(a) To apply for a license under this subchapter [ division], a person must file an application in a form prescribed by the department. The application must include at a minimum:

(1) the complete legal name, mailing address, email address, and telephone number of the applicant; and

(2) designation of each county in which the applicant's signs are to be erected or maintained.

(b) The application must be [signed, notarized, and] filed with the department and be accompanied by:

(1) a fully executed commercial sign [outdoor advertiser's] surety bond:

(A) in the amount of $2,500 for each county designated under subsection (a)(2) of this section up to a maximum of $10,000;

(B) payable to the commission to reimburse the department for removal costs of a sign that the license holder unlawfully erects or maintains; and

(C) in a form prescribed by the department, executed by a surety company authorized to transact business in this state;

(2) a duly certified power of attorney from the surety company authorizing the surety company's representative to execute the bond on the effective date of the bond;

(3) the license fee prescribed by §21.156 of this subchapter [division] (relating to License Fees); and

(4) if applicable, an indication that the applicant is a military service member, military spouse, or military veteran to ensure priority handling of application.

(c) If a paper application is filed, the form must be complete and the [The] documentation and the fee required under this section must be sent to: Texas Department of Transportation, Highway Beautification Section [Outdoor Advertising], P.O. Box 13043, Austin, Texas 78711-3043.

§21.153.License Issuance.

(a) The department will issue a license if the requirements of §21.152 of this subchapter [division] (relating to License Application) are satisfied.

(b) The department will not issue a license to an entity that is not authorized to conduct business in this state.

(c) To amend a license, the license holder must file an amended application in a form prescribed by the department and accompanied by a valid rider to the surety bond.

§21.154.License Not Transferable.

A license issued under this subchapter [division] is not transferable.

§21.155.License Renewals.

(a) To continue a license in effect, the license must be renewed annually in accordance with Subsection (b) of this section.

(b) To renew a license, the license holder must submit an [file a written] application in a form prescribed by the department accompanied by each applicable license fee prescribed by §21.156 of this subchapter [division] (relating to License Fees). The application must be received by the department before the 16th day of the month in which the license expires. The renewal [before the 46th day after the date of the license's expiration and] must include at a minimum proof of current surety bond coverage.[:]

[(1) the complete legal name, mailing address, and telephone number of the license holder;]

[(2) number of the license being renewed;]

[(3) proof of current surety bond coverage; and]

[(4) the signature of the license holder or person signing on behalf of the business entity.]

(c) An expired license may be reinstated if a renewal application, accompanied by proof of current surety bond and a $100 late processing fee, is received by the department not later than the 45th day after the expiration date of the license. A license reinstated under this subsection will have the same renewal date as if the renewal had been filed timely.

(d) [(c)] A license is not eligible for renewal if the license holder is not authorized to conduct business in this state.

(e) [(d)] If a paper renewal application is filed, it must be complete and the [The] documentation and the fee required under this section must be sent to: Texas Department of Transportation, Highway Beautification Section [Outdoor Advertising], P.O. Box 13043, Austin, Texas 78711-3043.

§21.156.License Fees.

(a) The amount of the fee for the issuance of a license issued under this subchapter is $125.

(b) The amount of the annual renewal fee is $75.

(c) In addition to the $75 annual renewal fee, an additional late fee of $100 is required for a renewal license application that is received before the 45th day after the expiration date of the license.

(d) A license fee is payable by credit card, check, cashier's check, or money order made payable to the Texas Highway Beautification Fund, and must be submitted with the application. If payment [the check or money order] is dishonored upon presentment, the license is voidable.

(e) The department will provide a renewal notification by mail or electronically to the license holder at least 45 days before the date of the license expiration and if the license is not renewed before it expires, the department [within 20 days after the date of expiration] will provide notification to the license holder of the opportunity to file a late renewal application.

§21.158.License Revocation.

(a) The department will revoke a license and will not issue or renew permits or transfer existing permits under the license if:

(1) the surety bond is not provided within the time specified by the department under §21.152 of this subchapter [division] (relating to License Application) or §21.155 of this subchapter [division] (relating to License Renewals);

(2) surety bond coverage is terminated under §21.157 of this subchapter [division] (relating to Temporary Suspension of License);

(3) the total number of final enforcement actions initiated by the department against the license holder under §21.176 of this subchapter (relating to Cancelation of Permit), §21.198 of this subchapter (relating to Order of Removal); §21.204 of this subchapter (relating to Administrative Penalties for Commercial Signs), §21.425 of chapter (relating to Cancelation of Permit), §21.426 of chapter (relating to Administrative Penalties), or §21.440 of chapter (relating to Order of Removal); or Transportation Code, Chapters 391 or 394, that result in the cancellation of the license holder's sign permit, payment of an amended penalty by the license holder, or the removal of the license holder's sign equal or exceed:

(A) 10 percent of the number of valid permits held by the license holder if the license holder holds more than 1,000 sign permits;

(B) 20 percent of the number of valid permits held by the license holder if the license holder holds at least 500 but fewer than 1,000 sign permits;

(C) 25 percent of the number of valid permits held by the license holder if the license holder holds at least 100 but fewer than 500 sign permits; or

(D) 30 percent of the number of valid permits held by the license holder if the license holder holds fewer than 100 sign permits; or

(4) the license holder has not complied with previous final administrative enforcement actions regarding the license or any permit held under the license.

(b) The department will send notice by certified mail of an action under this section to the address of record provided by the license holder.

(c) The notice will clearly state:

(1) the reasons for the action;

(2) the effective date of the action;

(3) the right of the license holder to request an administrative hearing; and

(4) the procedure for requesting a hearing including the period in which the request must be made.

(d) A request for an administrative hearing under this section must be made in writing to the department at the address listed on the notice letter within 45 days after the date that the notice is mailed.

(e) If timely requested, an administrative hearing will be conducted in accordance with Chapter 1, Subchapter E of this title (relating to Procedures in Contested Case).

(f) For the purposes of this section, an enforcement action is final if the time for any further review of the action or proceeding related to the action has expired.

§21.159.Permit Application.

(a) To obtain a permit for a commercial sign, a license holder [person] must file an application in a form prescribed by the department. The application must include, at a minimum:

(1) the complete name and address of the license holder [applicant];

(2) the complete name and address of the authorized agent of the license holder if an agent is used [the original signature of the applicant];

(3) the proposed location and description of the sign;

(4) the complete legal name and telephone number [address] of the owner of the designated site;

(5) the appraisal district property tax identification number of the designated site;

[(6) the original signature of the site owner or the site owner's authorized representative, with appropriate documentation from the site owner authorizing the person to act as the site owner's representative on the application demonstrating:]

[(A) consent to the erection and maintenance of the sign; and]

[(B) right of entry onto the property of the sign location by the department or its agents.]

(6) [(7)] city's current zoning of the sign's location; and

(7) [(8)] additional information the department considers necessary to determine eligibility.

[(b) If the sign is a nonprofit sign, the application must include verification of the applicant's nonprofit status.]

(b) [(c)] If the sign is to be located within [the jurisdiction of a municipality, including] the extraterritorial jurisdiction of a [the] municipality with a population greater than 1.9 million[, ] that is exercising its statutory authority to regulate commercial signs, as authorized under §21.200 of this subchapter (relating to Local Control of Commercial Signs) [outdoor advertising], a certified copy of the permit issued by the municipality within the preceding twelve months must be submitted with the application. [unless documentation is provided to show that the municipality requires:]

[(1) the issuance of a department permit before the municipality's; or]

[(2) the erection of the sign within a period of less than twelve months after the date of the issuance of the municipal permit.]

(c) [(d)] The application must be[:]

[(1) notarized;]

[(2) sent to: Texas Department of Transportation, Outdoor Advertising, P.O. Box 13043, Austin, Texas 78711-3043; and]

[(3)] accompanied by the fee prescribed by §21.175 of this subchapter [division] (relating to Permit Fees).

(d) If a paper application is filed:

(1) the applicant must certify that the application is complete and correct;

(2) the application must have original signatures; and

(3) the application, required documentation, and the fee required under this section must be sent to: Texas Department of Transportation, Highway Beautification Section, P.O. Box 13043, Austin, Texas 78711-3043.

(e) A permit application fee is payable by credit card or check made payable to the Texas Highway Beautification Fund.

(f) [(e)] To facilitate a site's location during the initial inspection process, the application must identify the sign site marking in accordance with §21.160 of this subchapter (relating to Applicant's Identification of a New Commercial Sign's Proposed Site) by:

(1) GPS coordinates in latitude and longitude, accurate within 50 feet; or

(2) a sketch or aerial map depicting distances to nearby landmarks.

(g) In addition to the other requirements of this section, an application for an electronic sign must include:

(1) a certified copy of the permit issued by the municipality that gives permission for the electronic sign at the site specified in the permit application or if the municipality does not issue permits, a certified copy of written permission from the municipality for the electronic sign at the site specified in the permit application; and

(2) contact information for a person who is available to be contacted at any time and who is able to turn off the electronic sign promptly if a malfunction occurs or is able to accommodate an emergency notification request from a local authority under §21.258 of this subchapter (relating to Emergency Information).

§21.160.Applicant's Identification of a New Commercial Sign's Proposed Site.

(a) An applicant for a new permit [for a new sign] must identify the proposed site of the sign on the parcel number indicated in the application by setting a stake or marking the concrete at the proposed location of the edge of the sign structure, including the sign face, that is nearest to the right of way.

(b) At least two feet of the stake must be visible above the ground. The stake or the mark must be distinguished from any other stake or mark at the location.

(c) A stake or mark on the concrete may not be moved or removed until the application is denied or if approved, until the sign has been erected.

§21.161.Site Owner's Consent; Withdrawal.

[(a)] A site owner's consent to the erection and maintenance of a commercial [the] sign and access to the site by the department or its agent is provided with the filing of a permit application under §21.159 of this subchapter [division] (relating to Permit Application). The consent operates for the life of the lease. [or until the owner delivers to the department and to the sign owner a written statement that permission for the maintenance or inspection by the department or its agents of the sign has been withdrawn and documentation showing that the lease allowing the sign has been terminated in accordance with the terms of the lease agreement or through a court order.]

[(b) If the sign owner provides documentation that the sign owner is disputing the lease termination, the department will not cancel the permit until a settlement signed by both parties or a court order settling the dispute is delivered to the department.]

§21.162.Permit Application for Certain Preexisting Commercial Signs.

(a) If a sign was in place before the time that the land on which the sign is located first became subject to Transportation Code, Chapter 391, the owner of the sign must apply for a permit for the sign within 60 days after the date on which the department sends notice by certified mail to the owner that a permit for the sign is required. Failure to obtain a permit as required by the department will result in an order of removal under §21.198 of this subchapter (relating to Order of Removal).

(b) The department may issue a permit with a non-conforming status if the sign was lawfully erected before the roadway became subject to regulation and the conditions of the sign or location do not meet current requirements.

§21.163.Permit Application Review.

(a) The department will consider permit applications in the order of the receipt of completed [the] applications.

(b) If a paper [an] application is rejected because it is not complete, lacks documentation, or has incorrect information, the application loses its priority position. The department will notify [and a copy of the application will be sent to] the applicant of [outlining] the reasons the application was rejected.

(c) The department will hold an application that is for the same site as or a conflicting site with that of an application that the department previously received until the department makes a final decision on the previously received application. The department will notify the applicant that the applicant's application is being held because an application for the same or a conflicting site was previously received. For the purposes of this subsection, the date of a final decision on an application is:

(1) the date of the final decision on an appeal under §21.170 of this subchapter [division] (relating to Appeal Process for Permit Denials); or

(2) if an appeal is not filed within the period provided by §21.170 of this subchapter [division], on the 46th day after the date the denial notice was received under §21.164 of this subchapter [division] (relating to Decision on Application).

(d) The department will review the permit application for completeness, correctness, and compliance with all requirements of this subchapter [division]. Measurements will be taken at the site to determine if the sign placement meets the spacing and location requirements.

§21.164.Decision on Application.

(a) The department will make a decision on an application within 60 days after the date of receipt of the application. If the decision cannot be made within the 60 day period, the department will notify the applicant of the delay and provide the reason for the delay and provide an estimate for when the decision will be made.

(b) If the permit application is approved, the department will issue a permit for the sign [by sending a copy of the approved application and a sign permit plate to the applicant].

(c) If the permit application is not approved, the department will send to the applicant [a copy of the denied application and] a notice that states the reason for the denial.

[(d) If the permit application is denied, the department will notify the landowner identified on the permit application of the denial by written notice. The notice is for informational purposes only, and does not convey any rights to the landowner. The landowner may not appeal the denial unless the landowner is also the applicant.]

§21.166.Commercial Sign Location Requirements.

(a) The department will not issue a permit under this subchapter [division] unless the sign for which application is made is located along a roadway to which Transportation Code, Chapter 391, applies and is in:

(1) an unzoned commercial, governmental, or industrial area; or

(2) a zoned commercial or industrial area.

(b) Subsection (a) of this section does not apply to a commercial sign that was lawfully in existence when it became subject to Transportation Code, Chapter 391.

(c) The department will not issue a permit or approve an application for an amended permit if the location of the sign is within the corridor of a section of highway that has received environmental clearance and alignment approval by the Federal Highway Administration, but for which the construction contract has not been awarded.

(d) An electronic sign may be located, relocated, or upgraded only along a regulated highway and within:

(1) the corporate limits of a municipality that allows electronic signs under its sign or zoning ordinance; or

(2) the extraterritorial jurisdiction of a municipality described by paragraph (1) of this subsection that under state law has extended its municipal regulation to include and allow electronic signs in that area.

(e) An electronic sign may not be located within 1,500 feet of another electronic sign on the same highway if facing the same direction of travel, or if the sign will be located in a political subdivision that is authorized to exercise control under §21.200 of this subchapter (relating to Local Control of Commercial Signs) the sign spacing must comply with the Texas Federal and State Agreement on Highway Beautification.

§21.167.Erection and Maintenance from Private Property.

(a) The department will not issue a permit for a commercial sign unless it can be erected and maintained from private property.

(b) If the department finds sufficient evidence that the license holder [licensee] destroyed vegetation on the right of way for a proposed sign site, the permit application will be denied.

§21.168.Conversion of Certain Authorization to Permit.

(a) The department will convert a commercial sign registration issued under §21.409 of this chapter (relating to Permit Application) or a permit issued under §21.407 of this chapter (relating to Existing Off-Premise Signs) to a commercial sign permit under this subchapter [division] if a highway previously regulated under Transportation Code, Chapter 394 becomes subject to Transportation Code, Chapter 391.

(b) A holder of a permit or registration converted under this section is not required to pay an original permit fee under §21.175 of this subchapter [division] (relating to Permit Fees). The permit must be renewed under §21.172 of this subchapter [division] (relating to Permit Renewals), on the date the renewal of the permit or registration issued under §21.407 or §21.409 of this chapter, as appropriate, would have been due.

(c) If a commercial sign owner has prepaid registration fees under §21.407 of this chapter, the outstanding balance will be credited to the sign owner's annual renewal fee.

[(d) The department will issue a sign permit plate to a holder of a permit or a registration converted under this section at no charge. If a replacement plate is needed after the initial issuance, a fee will be charged in accordance with §21.175 of this division.]

§21.169.Notice of Commercial Sign Becoming Subject to Regulation.

(a) The department will send notice by certified mail to the owner of a commercial sign that becomes subject to Transportation Code, Chapter 391 [because of the construction of a new highway, the change in designation of an existing highway, or decertification of a certified city]. If the owner of the sign cannot be identified from the information on file with the department, the department will give notice to the landowner of record [by prominently posting the notice on the sign for a period of 45 consecutive days].

(b) If the owner of a commercial sign described by subsection (a) of this section does not hold a license issued under §21.153 of this subchapter [division] (relating to License Issuance) or §21.450 of this chapter (relating to License Issuance), the owner must obtain the license within 60 days after the day that[:]

[(1)] the department sends notice under subsection (a) of this section.[; or]

[(2) the 45-day posting period under subsection (a) of this section ends.]

(c) The sign owner must obtain a permit in accordance with §21.162 of this subchapter (relating to Permit Application for Certain Preexisting Commercial Signs) within 60 days after the later of the date of receipt of the notice under subsection (a) of this section or the date of the issuance of the license in accordance with subsection (b) of this section.

(d) If the sign owner fails to obtain a permit from the department within the period described by subsection (c) of this section, or the sign owner cannot be determined or located, the landowner will be required to remove the sign structure in accordance with §21.198 of this subchapter (relating to Order of Removal).

§21.170.Appeal Process for Permit Denials.

(a) If a commercial sign permit is denied, the applicant may file a request for an appeal with the executive director through the Right of Way Division [for an appeal].

(b) The request for appeal must be written and sent:

(1) electronically at ROW_outdooradvertising@txdot.gov; or [be in writing;]

(2) by mail to: P.O. Box 5075, Austin, Texas 78704-5075, attention "Highway Beautification Section."

(c) The request must:

(1) [(2)] contain[:]

[(A) a copy of the denied permit application;]

[(B)] a statement of why the denial is believed to be in error; [and]

(2) [(C)] provide evidence that supports the issuance of the permit [application], such as documents, drawings, surveys, or photographs; and

(3) be received within 45 days after the date the denial notice was received.

(d) [(c)] The executive director or the executive director's designee who is not below the level of assistant executive director, will make a final determination on the appeal within 60 days after the date that the executive director receives the request for appeal. If the final determination is that the permit is denied, the executive director or the executive director's designee will send the final determination to the applicant stating the reason for denial. If the determination is that the application be approved, the department will issue the permit in accordance with §21.164 of this subchapter [division] (relating to Decision on Application).

[(d) If the executive director or designee is unable to make a final determination on the appeal within the 60-day period under subsection (c) of this section, the department will notify the applicant by mail of the delay and provide an estimated time in which a final determination will be made.]

§21.171.Permit Expiration.

(a) A permit is valid for one year.

(b) A permit automatically expires on the date that the license under which the permit was issued expires or is revoked by the department under §21.158 of this subchapter [division] (relating to License Revocation).

§21.172.Permit Renewals.

(a) To be continued in effect, a sign permit must be renewed annually on or before its expiration date.

(b) A permit is eligible for renewal if the sign for which it was issued continues to meet all applicable requirements of this subchapter [division] and Transportation Code, Chapter 391.

(c) To renew the permit, the permit holder must file with the department a renewal [written] application in a form prescribed by the department accompanied by the applicable fees prescribed by §21.175 of this subchapter [division ] (relating to Permit Fees). The application with all applicable fees must be received by the department before the 46th day after the date of the permit's expiration.

(d) A permit may not be renewed if the sign for which it was issued is not erected to the extent that it includes a sign face or the permit holder has not demonstrated an identifiable legal access route from private property before the first anniversary of the date that the permit was issued.

(e) The department will provide a renewal notification to the license holder of record at least 30 days before the date of the permit expiration. If the permit is not renewed on or before its expiration date, [it expires, not later than 30 days after the date of expiration] the department will provide notification to the license holder of the opportunity to file a late renewal with all applicable fees.

(f) The department will inspect the sign site and the sign structure on or after the first anniversary of the date of the permit's issuance for compliance with applicable law, including regulations.

(g) If on the date of the inspection under subsection (f) of this section, the sign structure is not built to the full extent approved by the permit with respect to dimensions, lighting, height, or number of faces, the department will adjust the permit to reflect the dimensions, lighting, height, and number of faces of the sign structure as they exist on that date. The permit will be eligible for renewal only for the dimensions, lighting, height, and number of faces as adjusted by the department.

(h) The documentation and fees [fee] required under this section must be sent to: Texas Department of Transportation, Highway Beautification Section [Outdoor Advertising], P.O. Box 13043, Austin, Texas 78711-3043 or submitted to the department electronically through a process established by the department.

(i) By filing a renewal application, the sign owner is asserting to the department that the sign meets all applicable requirements of this subchapter. Renewal of a permit does not indicate that the department has determined that the sign is in compliance with applicable regulations.

§21.173.Transfer of Permit.

(a) A sign permit may be transferred only with the written approval of the department.

(b) At the time of the transfer, both the transferor and the transferee must hold a valid license issued under §21.153 of this subchapter [division] (relating to License Issuance) or §21.450 of this chapter (relating to License Issuance), except as provided in subsections (e) - (g) of this section.

(c) The permit holder must send to the department a [written] request to transfer a sign permit in a form prescribed by the department accompanied by the applicable fees prescribed by §21.175 of this subchapter [division] (relating to Permit Fees). The request may be submitted online or in writing.

(d) If the request is submitted in writing and is approved, the department will send to the transferor and to the transferee a copy of the approved permit transfer form.

(e) If the request is submitted electronically, the department will send the request to the transferor for affirmation, If affirmed by transferor, the department will notify the transferee to submit applicable fees required under subsection (c) of this section. After the fee is received, the department will confirm the completed permit transfer to the transferor and transferee electronically. [A permit issued to a nonprofit organization under §21.149 of this division (relating to Nonprofit Sign Permit) may be transferred to another nonprofit organization that does not hold a license issued under §21.153 of this division or §21.450 of this chapter if the sign will be maintained as a nonprofit sign.]

[(f) A permit issued to a nonprofit organization under §21.149 of this division may be converted to a regular permit and transferred to a person that is not a nonprofit organization if the transferee holds a license for the county in which the sign is located at the time of the transfer and the sign meets all requirements of this division.]

(f) [(g)] The department may approve the transfer of one or more commercial sign permits from a transferor to a person who holds a license, with or without the signature of the transferor, if the person provides to the department:

(1) legal documents showing the sign has been sold;

(2) documents that indicate that the transferor is dead or cannot be located; or

(3) a court order demonstrating the new ownership of the sign permit.

(g) [(h)] The department will not approve the transfer if cancellation of the permit is pending or has been abated awaiting the outcome of an administrative hearing.

(h) [(i)] The department will approve a transfer only if the permit is valid.

(i) [(j)] The documentation and fees [fee] required under this section must be sent to: Texas Department of Transportation, Highway Beautification Section [Outdoor Advertising], P.O. Box 13043, Austin, Texas 78711-3043 or submitted to the department electronically through the process established by the department.

§21.174.Amended Permit.

(a) To perform customary maintenance or to make substantial changes to a commercial sign [the sign or sign structure] under §21.191 of this subchapter [division] (relating to Repair and Maintenance of Commercial Signs) a permit holder must obtain an amended permit before initiating any action to the sign structure. To change the sign face of an existing permitted sign to an electronic sign under [Division 2 of] this subchapter, [(relating to Electronic Signs)] a permit holder must obtain an amended permit.

(b) To obtain an amended permit, the permit holder must submit an amended permit application on a form prescribed by the department. The amended permit application must provide the information required under §21.159 of this subchapter [division] (relating to Permit Application) applicable to an amended permit and indicates the change from the information in the original application for the sign permit. [The amended application is not required to contain the signatures of the land owner or city representative.]

(c) The new sign face size, configuration, height, or lighting, [or location] must meet all applicable requirements of this subchapter. [division and if the amended permit is to erect an electronic sign, the requirements of Division 2 of this subchapter.]

(d) The holder of a permit for a nonconforming sign may apply for an amended permit to perform eligible customary maintenance under §21.191(b) of this subchapter [division]. An amended permit will not be issued for a substantial change as described by §21.191(c) of this subchapter [division] to a nonconforming sign.

(e) Making a change to a sign, except as provided by subsection (h) of this section, without first obtaining an amended permit is a violation of this subchapter [division] and will result in an administrative enforcement action.

(f) The department will make a decision on an amended permit application within 60 days of the date of the receipt of the amended permit application. If the decision cannot be made within the 60 day period the department will notify the applicant of the delay, provide the reason for the delay and provide an estimate of when the decision will be made.

(g) If an amended permit application is denied, the applicant may file a request with the executive director for an appeal using the same procedures found in §21.170 of this subchapter [division] (relating to Appeal Process for Permit Denials).

(h) If maintenance or changes authorized under this section are being made on a conforming sign because of a natural disaster, on request the department may waive the requirement that the required amended permit be issued before the work begins. If the department grants a waiver under this subsection, the permit holder shall submit the amended permit application within 60 days after the date that the work is completed. If the maintenance or changes violate this section or the permit holder fails to submit the amended permit application as required by this subsection, the sign is subject to enforcement and removal actions.

(i) An amended permit is valid for one year after the date of the department's approval of the amended permit application. If any of the changes approved in the amended permit application are not completed within one year after the date of the department's approval, the license holder must reapply to make those changes and must pay the prescribed fee. The provisions of this subchapter relating to a permit, including §21.172(g) of this subchapter [division] (relating to Permit Renewals), apply to the amended permit. The date of the department's approval of the amended permit application is considered to be the amended permit's date of issuance.

(j) The documentation and fee required under this section must be sent to: Texas Department of Transportation, Highway Beautification Section [Outdoor Advertising], P.O. Box 13043, Austin, Texas 78711-3043 or submitted to the department electronically through the process established by the department.

(k) If a sign is built with a smaller face than the size shown on the permit application, with fewer faces or number of lights shown on the permit application, or if the number of faces or lights is reduced or any face is reduced in size after the sign [it] is built, an amended permit will be required to make any changes to the configuration, height, or increase the size of the face or increase the number of lights.

(l) An amended application will not be approved to change the location of a permitted sign structure.

(m) A conforming commercial sign may be modified to be an electronic sign only if an amended permit for the electronic sign is obtained from both the municipality in whose jurisdiction the sign is located and the department.

§21.175.Permit Fees.

(a) The amounts of the fees related to permits under this subchapter are:

(1) $100 for an original or amended permit for a sign;

[(2) $100 for an original or amended permit issued under Division 2 of this subchapter for an electronic sign];

(2) [(3)] $100 for an original permit for a sign that was lawfully in existence when the sign became subject to Transportation Code, Chapter 391;

(3) [(4)] $75 for the renewal of a permit; and

[(5) $75 for the renewal of a permit issued under Division 2 of this subchapter for an electronic sign;]

(4) [(6)] $25 for the transfer of a permit.[; and]

[(7) $25 for a replacement sign permit plate.]

(b) The original and renewal permit fee for a nonprofit sign permit is $10.]

(b) [(c)] In addition to the $75 annual renewal fee, an additional late fee of $100 is required for a renewal of a permit if the renewal application is received by the department after the permit expiration date but before the 46th day after the permit expiration date.

[(d) No fee is charged for the transfer of a permit issued to a nonprofit organization to another nonprofit under §21.173 of this division (relating to Transfer of Permit). The fee provided under subsection (a)(6) of this section applies to the conversion and transfer of a permit issued to a nonprofit organization to a person other than a nonprofit organization under §21.173 of this division.]

(c) [(e)] A fee prescribed by this section is payable by credit card, check, cashier's check, or money order. If payment [a check or money order] is dishonored upon presentment, the permit, renewal, amended permit, or transfer is void.

§21.176.Cancellation of Permit.

(a) The department will cancel a permit for a commercial sign if the sign:

(1) is removed, unless the sign is removed and re-erected at the request of a condemning authority;

(2) is not maintained in accordance with this subchapter [division] or Transportation Code, Chapter 391;

(3) is damaged beyond repair, as determined under §21.197 of this subchapter [division] (relating to Discontinuance of Nonconforming Commercial Sign Due to Destruction);

(4) is abandoned, as determined under §21.181 of this subchapter [division] (relating to Abandonment of Sign);

(5) has substantial changes made to a non-conforming sign in violation of this subchapter [division] or Transportation Code, Chapter 391;

(6) is built by an applicant who uses false information on a material issue of the permit application;

(7) is erected, repaired, or maintained in violation of §21.199 of this subchapter [division] (relating to Destruction of Vegetation and Access from Right of Way Prohibited);

(8) has been made more visible by the permit holder clearing vegetation from the highway right of way in violation of §21.199 of this subchapter [division];

(9) is located in an unzoned commercial or industrial area and the department has evidence that an activity supporting the unzoned commercial or industrial area was created primarily or exclusively to qualify the area as an unzoned commercial or industrial area[, and that no activity has been conducted at the site within one year]; or

(10) is accessed, erected, repaired, or maintained from the right of way [site cannot be accessed from private property].

(b) The department will cancel a permit for a commercial sign if the sign owner:

(1) fails to cure a violation in accordance with §21.205 of this subchapter, (relating to Curable Commercial Sign Permit Violations); or

(2) fails to pay an administrative penalty under §21.204 of this subchapter, (relating to Administrative Penalties for Commercial Signs).

[(b) The department may cancel a permit for a sign if the sign:]

[(1) is erected after the effective date of this section and is more than twenty feet from the location described in the permit application, or is built within twenty feet of the location described in the permit application but at a location that does not meet all spacing requirements of this chapter or other assertions contained in the permit application;]

[(2) has customary repairs made to a non-conforming sign, or substantial changes made to a conforming sign without obtaining a required amended permit under §21.174 of this division (relating to Amended Permit);]

[(3) is erected, repaired, or maintained from the right of way; or]

[(4) does not have the permit plate properly attached under §21.165 of this division (relating to Sign Permit Plate).]

[(c) Before initiating an enforcement action under this section, the department will notify the sign owner in writing of the violation of subsection (b) of this section and will give the sign owner 60 days to correct the violation, provide proof of the correction, and if required, obtain an amended permit from the department.]

(c) [(d)] Upon determination that a permit should be canceled, the department will mail a notice of cancellation to the address of the record permit [license ] holder. The notice must state:

(1) the reason for the cancellation;

(2) the effective date of the cancellation;

(3) the right of the permit holder to request an administrative hearing on the cancellation; and

(4) the procedure for requesting a hearing and the period for filing the request.

(d) [(e)] A request for an administrative hearing under this section must be in writing and delivered to the department within 45 days after the date that the notice of cancellation is received.

(e) [(f)] If timely requested, an administrative hearing will be conducted in accordance with Chapter 1, Subchapter E of this title (relating to Procedures in Contested Case) and the cancellation is abated until the cancellation is affirmed by order of the commission.

(f) [(g)] A permit holder may voluntarily cancel a permit by submitting a request in writing after the sign has been removed. Subsections (c) - (e) [(d) - (f)] of this section do not apply to a permit voluntarily canceled under this subsection.

[(h) The department will notify the landowner identified on the permit application of a cancellation enforcement action. The notice is for informational purposes only, and does not convey any rights to the landowner. The landowner may not appeal the cancellation unless the landowner is also the holder of the permit.]

§21.177.Commercial or Industrial Area.

For the purposes of this subchapter [division], a commercial or industrial area is:

(1) a zoned commercial or industrial area described by §21.178 of this subchapter [division] (relating to Zoned Commercial or Industrial Area); or

(2) an unzoned commercial or industrial area described by §21.179 of this subchapter [division] (relating to Unzoned Commercial or Industrial Area).

§21.178.Zoned Commercial or Industrial Area.

A zoned commercial or industrial area is an area that is designated, through a comprehensive zoning action, for general commercial or industrial use by a political subdivision with legal authority to zone. An area is not a zoned commercial or industrial area if it is:

(1) an area in which limited commercial or industrial activities incident to other primary land uses is allowed;

(2) an area that is designated for and created primarily to allow commercial sign [outdoor advertising] structures along a regulated highway;

(3) an unrestricted area; or

(4) a small parcel or narrow strip of land that cannot be put to ordinary commercial or industrial use and that is designated for a use classification that is different from and less restrictive than its surrounding area.

§21.179.Unzoned Commercial or Industrial Area.

(a) An unzoned commercial or industrial area is an area that:

(1) is within 800 feet, measured from the nearest point along the edge of the highway right of way perpendicular to the centerline of the main-traveled way, of and on the same side of the highway as the principal part of at least two adjacent recognized governmental, commercial, or industrial activities that meet the requirements of subsection (c) of this section;

(2) is not predominantly used for residential purposes; and

(3) has not been zoned under authority of law.

(b) A part of the regularly used buildings, parking lots, or storage or processing areas of each of the governmental, commercial, or industrial activities must be within 200 feet of the highway right of way and a portion of the permanent building in which the activity is conducted must be visible from the main-traveled way.

(c) For governmental, commercial, or industrial activities to be considered adjacent for the purposes of subsection (a)(1) of this section, the regularly used buildings, parking lots, storage or processing areas of the activities may not be separated by:

(1) a public road, or a street; or

(2) more than 50 feet of:

(A) vacant lot;

(B) undeveloped area; or

(C) a non-governmental, non-commercial, or non-industrial area.

(d) Two activities that occupy the same building qualify as adjacent activities for the purposes of subsection (a)(1) of this section, if:

(1) each activity:

(A) has at least 400 square feet of floor space dedicated to that activity; and

(B) is an activity that is customarily allowed only in a zoned commercial or industrial area;

(2) the two activities are separated by a dividing wall constructed from floor to ceiling;

(3) the two activities have access to the restroom facilities during all hours the activity is staffed or opened; and

(4) the two activities operate independently of one another.

(e) For the purposes of subsection (d) of this section, two separate product lines offered by one business are not considered to be two activities.

(f) To determine whether an area is not predominantly used for residential purposes under subsection (a)(2) of this section, not more than 50 percent of the area, considered as a whole, may be used for residential purposes. A road or street is considered to be used for residential purposes only if residential property is located on both of its sides. The area to be considered is the total of actual or projected frontage of the commercial or industrial activities plus 800 feet on each side of that frontage, measured along the highway right of way to a depth of 660 feet. The depth of an unzoned commercial or industrial area is measured from the nearest edge of the highway right of way perpendicular to the centerline of the main-traveled way of the highway.

(g) The length of an unzoned commercial or industrial area is measured from the outer edge of the regularly used building, parking lot, storage, or processing area of the commercial or industrial activity and along or parallel to the edge of the pavement of the highway. If the business activity does not front the highway, a projected frontage is measured from the outer edge of the regularly used building, parking lot, storage, or processing area to a point perpendicular to the centerline of the main-traveled way.

(h) A sign is not required to meet the requirements of subsection (d)(1)(A), (2), or (3) of this section or §21.180 of this subchapter [division] (relating to Commercial or Industrial Activity) to maintain conforming status if the permit for the sign was issued before the effective date of this section.

§21.180.Commercial or Industrial Activity.

(a) For the purposes of this subchapter [division ], a governmental, commercial or industrial activity is an activity that:

(1) is customarily allowed only in a zoned commercial or industrial area; and

(2) is conducted in a permanent building or structure permanently affixed to the real property that:

(A) has an indoor restroom, running water, functioning electrical connections, and permanent flooring, other than dirt, gravel, or sand;

(B) is visible from the traffic lanes of the main-traveled way;

(C) is not primarily used as a residence; and

(D) has at least 400 square feet of its interior floor space devoted to the activity.

(b) For the purposes of this subchapter, a building or structure is considered permanently affixed if:

(1) it has an attached septic field or is part of a sewer system, or is considered to be real property by the county appraisal district; or

(2) all of the following requirements are met:

(A) it has no wheels attached;

(B) it does not have a towing device, such as hitch or tongue; and

(C) it has anchoring straps or cables affixed to the ground using pier footing.

(c) The following are not commercial or industrial activities:

(1) agricultural, forestry, ranching, grazing, farming, and related activities, including the operation of a temporary wayside fresh produce stand;

(2) an activity that is conducted only seasonally;

(3) an activity that has not been conducted at its present location for at least 180 days;

(4) an activity that is not conducted by at least one person at the activity site, and that is not operated for at least 30 hours per week and on at least four days per week;

(5) the operation or maintenance of:

(A) a commercial sign [an outdoor advertising structure];

(B) a public space [recreational facility, such as a campground, golf course, tennis court, wild animal park, or zoo,] other than the related activities conducted in a building or structure that meets the requirements of subsection (a)(2) of this section and the parking facilities for that building or structure;

(C) an apartment house or residential condominium;

(D) a public or private preschool, secondary school, college, or university, other than a trade school or corporate training campus;

(E) a quarry or borrow pit, other than the related activities conducted in a building or structure that meets the requirements of subsection (a)(2) of this section and the parking facilities for that building or structure;

(F) a cemetery; or

(G) a place that is primarily used for worship;

(6) an activity that is conducted on a railroad right of way; and

(7) an activity that is created primarily or exclusively to qualify an area as an unzoned commercial or industrial area.

(d) For the purposes of this section, a building is not primarily used as a residence if more than 50 percent of the building's square footage is used solely for the business activity.

(e) A sign is not required to meet the requirements of subsection (a)(2)(C) (as clarified by subsection (d) of this section), (a)(2)(D), (c)(3), or (c)(4) of this section to maintain conforming status if the permit for the sign was issued before the effective date of this section.

§21.181.Abandonment of Sign.

(a) The department may consider a sign abandoned and cancel the sign's permit if:

(1) all [the] sign faces are [face is] blank or without legible content; [advertising or copy for a period of 365 consecutive days or longer;or]

(2) the sign structure needs more than customary maintenance to be repaired; or

(3) the sign structure is overgrown by trees or other vegetation.

[(b) Small temporary signs, such as garage sale signs or campaign signs, that are attached to the structure do not constitute legible advertising or copy for the purpose of ending the period under subsection (a)(1) of this section.]

(b) [(c)] The department will not consider the payment of property taxes or the retention of a sign as a balance sheet asset in determining whether the sign permit should be canceled under this section.

[(d) The department may initiate the cancellation process if the department has evidence that supports the fact that the sign face has been blank or has been without legible advertisement or copy for 365 days, such as photographs showing that on at least four dates throughout the 365-day period the sign was in the same condition or was degrading. Evidence is not required for each of the 365 days.]

[(e) If the location of the abandoned sign is allowed under this division, the department may issue a permit for the sign site to anyone who submits an application that meets the requirements of this division. The department will not issue a permit for an abandoned sign that is located in a place that does not meet the requirements of this division.]

[(f) For the purposes of this section "copy" includes any advertisement that the sign is available for lease.]

[(g) A multi-face sign is not abandoned unless all sign faces may be considered abandoned under this section.]

[(h) Before initiating a cancellation process under this section the department will provide notice to the sign owner and land owner as identified on the permit application of the abandonment determination and allow the sign owner 60 days to correct the issue.]

§21.182.Commercial Sign Face Size and Positioning.

(a) A sign face may not exceed:

(1) 672 square feet in area;

(2) 25 feet in height; and

(3) 60 feet in length.

(b) For the purposes of this section, border and trim are included as part of the sign face, and the base, apron, supports, and other structural members, are excluded as part of the sign face.

(c) Notwithstanding the area limitation provided by subsection (a)(1) of this section, one or more temporary protrusions may be added to a sign, provided that the sign face, including the protrusions, meets the height and length limitations of subsection (a) of this section and:

(1) the area of a protrusion is located exclusively inside of the sign face border and trim; or

(2) the area of the protrusion is outside of the sign face border and trim, as indicated on the sign permit, and does not exceed 10 percent of the permitted area.

(d) Except as provided in subsection (g) of this section, a [A] sign may have two or more sign faces that are placed back-to-back, side-by-side, stacked, or in "V" type construction with not more than two faces presented in each direction. If such an arrangement is used, the sign structure or structures are considered to be one sign for all purposes. Two sign faces which together exceed 700 square feet in area may not face in the same direction.

(e) Two sign faces that face in the same direction may be presented as one face by covering both faces and the area between the faces with an advertisement, as long as the size limitations of subsection (a) of this section are not exceeded.

(f) A sign may not have a moveable protrusion unless authorized under [Division 2 of] this subchapter [(relating to Electronic Signs)].

(g) Two electronic sign faces may be located on the same sign structure if each sign face is visible only from a different direction of travel.

§21.184.Location of Commercial Signs Near Public Spaces [Parks].

(a) The center of a sign may not be located within 250 feet of the nearest point of the boundary of a public space [park].

(b) This subsection applies only if a public space [park] boundary abuts the right of way of a regulated highway. A sign may not be located within 1,500 feet of the boundary of the public space [park], as measured along the right of way line from the nearest common point of the space's boundary and the right of way. This limitation applies:

(1) on both sides of a highway that is on a nonfreeway primary system; or

(2) on the side of a highway on which the public space [park] is located, if the highway is on an interstate or freeway primary system.

§21.185.Location of Commercial Signs Near Certain Facilities.

(a) A sign may not be erected along a freeway or interstate regulated highway that is outside an incorporated municipality in an area that is adjacent to or within 1,000 feet of:

(1) an interchange or intersection at grade; or

(2) a rest area, ramp, or the highway's acceleration and deceleration lanes.

(b) The distance from a ramp or acceleration or deceleration lane is measured from the point of the pavement widening at the beginning of the entrance or exit ramp and from the point that the pavement widening ends at the conclusion of the entrance or exit ramp.

(c) The distance from a rest area is measured along the right of way line from the outer edges of the rest area boundary abutting the right of way.

(d) An area is adjacent to a rest area or a highway's acceleration or deceleration lane if the area is between the point of the highway widening at the beginning of the entrance or exit ramp and the point that pavement widening ends at the conclusion of the entrance or exit ramp.

(e) All measurements are taken from a point perpendicular to the highway and along the highway right or way.

§21.186.Location of Commercial Signs Near State Right of Way.

A sign may not be erected so that the part of the sign face nearest a highway is within five feet of the highway's right of way line.

§21.187.Spacing of Commercial Signs.

(a) Permitted signs on the same side of a regulated freeway, including freeway frontage roads, may not be erected closer than 1,500 feet apart.

(b) For a highway on a non-freeway primary system and outside the incorporated boundaries of a municipality, permitted signs on the same side of the highway may not be erected closer than 750 feet apart.

(c) For a highway on a non-freeway primary system highway and within the incorporated boundaries of a municipality, permitted signs on the same side of the highway may not be erected closer than 300 feet apart.

(d) A permitted sign that is located within the incorporated boundaries of a certified city on a highway on a freeway primary system may not be closer than:

(1) 1,500 feet to another sign that is on the same side of the highway and outside the incorporated boundaries of a municipality; or

(2) 500 feet to another sign that is on the same side of the highway and inside the incorporated boundaries of a municipality.

(e) A permitted sign that is located within the incorporated boundaries of a municipality on a highway that is on a non-freeway primary system may not be closer than:

(1) 750 feet to another sign that is on the same side of the highway and outside the incorporated boundaries of a municipality; or

(2) 300 feet to another sign that is on the same side of the highway and inside the incorporated boundaries of a municipality.

(f) For the purposes of this section, the space between commercial signs is measured between points along the right of way of the highway perpendicular to the center of the signs.

(g) For the purposes of this section, a municipality's extraterritorial jurisdiction is not considered to be included within the boundaries of the municipality.

[(h) This section does not apply to directional signs, on-premise signs, or official signs that are exempted from the application of Transportation Code, §391.031.]

(h) [(i)] The spacing requirements of this section do not apply to commercial signs separated by buildings, natural surroundings, or other obstructions in a manner that causes only one of the signs to be visible within the specified spacing area.

(i) [(j)] A permitted sign may not be erected within five feet of the highway right of way line. The distance shall be measured from the end of the sign face nearest the right of way line.

(j) [(k)] A permitted sign that is being displaced by a highway construction project will not be considered in determining the spacing for a new sign application.

§21.188.Wind Load Pressure.

An application for new commercial sign permit or a permit renewal must include a certification [signed] by the applicant that the proposed or existing sign will withstand wind load pressures in pounds per square foot as set out in the following table.

Figure: 43 TAC §21.188 (No change.)

§21.189.Commercial Sign Height Restrictions.

(a) Except as provided by subsections [subsection ] (f) and (g) of this section, a commercial sign may not be erected that exceeds an overall height of 42-1/2 feet.

(b) A roof sign that has a solid sign face surface may not at any point exceed 24 feet above the roof level.

(c) A roof sign that has an open sign face in which the uniform open area between individual letter or shapes is not less than 40 percent of the total gross area of the sign face may not at any point exceed 40 feet above the roof level.

(d) The lowest point of a projecting roof sign or a wall sign must be at least 14 feet above grade.

(e) For the purposes of this section, height is measured from the centerline of the main-traveled way closest to the sign face, at a point perpendicular to the sign location. A frontage road of a controlled access highway or freeway is not considered the main-traveled way for purposes of this subsection. In the event that the main-traveled way that is perpendicular to the sign structure is below grade, sign height will be measured from the base of the sign structure.

(f) The height measurement does not include any renewable energy device such as solar panels or wind turbines that are attached to the sign structure above the sign face to improve the energy efficiency of the sign structure.

(g) A commercial sign structure erected prior to March 1, 2017,may not be higher than 85 feet, excluding a cutout that extends above the rectangular border of the sign face.

(h) A person may rebuild a sign structure erected prior to March 1, 2017,without obtaining a new or amended permit from the department, provided that the sign is rebuilt at the same location where the sign existed on March 1, 2017, at a height that does not exceed the height of the sign on that date and continues to complies with all other provisions of the sign permit except height.

§21.190.Lighting of and Movement on Commercial Signs.

(a) Other than a sign permitted as an electronic sign, a [A] sign may not contain or be illuminated by flashing, intermittent, or moving lights, including any type of screen using animated or scrolling displays[, except that this subsection does not apply to a sign that only provides public service information, such as time, date, temperature, weather, or similar information].

(b) A conforming [Except for a relocated sign, any new] sign may be illuminated but only by:

(1) upward lighting of no more than 4 luminaires per direction of the sign face or faces of the structure; or

(2) downward lighting of no more than 4 luminaires per direction of the sign face or faces of the structure.

(c) Lights that are a part of or illuminate a sign:

(1) must be shielded, directed, and positioned to prevent beams or rays of light from being directed at any portion of the traveled ways of a regulated highway;

(2) may not be of such intensity or brilliance as to cause vision impairment of a driver of any motor vehicle on a regulated highway or otherwise interfere with the driver's operation of a motor vehicle; and

(3) may not obscure or interfere with the effectiveness of an official traffic sign, device, or signal.

(d) A temporary protrusion may not be illuminated by flashing or moving lights or enhanced by reflective material that creates the illusion of flashing or moving lights.

(e) Reflective paint or reflective disks may be used on a sign face only if the paint or disks do not:

(1) create the illusion of flashing or moving lights; or

(2) cause an undue distraction to the traveling public.

(f) A neon light may be used on a sign face only if:

(1) the light does not flash;

(2) the light does not cause an undue distraction to the traveling public; and

(3) the permit for the sign specifies that the sign is an illuminated sign.

(g) This subchapter [division] does not prohibit a temporary protrusion area of the sign face that displays only numerical characters and that satisfies this subsection and the requirements of §21.182 of this subchapter [division] (relating to Commercial Sign Face Size and Positioning). An electronic sign may contain a temporary protrusion described by this subsection. The display on the temporary protrusion may be a digital or other electronic display, but if so:

(1) it must consist of a stationary image;

(2) it may not change more frequently than four times in any 24 hour period; and

(3) the process of any change of display must be completed within two minutes.

(h) If the department finds that an electronic sign causes glare or otherwise impairs the vision of the driver of a motor vehicle or otherwise interferes with the operation of a motor vehicle, the owner of the sign, within 12 hours of a request by the department, shall reduce the intensity of the sign to a level acceptable to the department.

§21.191.Repair and Maintenance of Commercial Signs.

(a) The following are considered to be routine maintenance activities that do not require an amended permit:

(1) the replacement of nuts and bolts;

(2) nailing, riveting, or welding;

(3) cleaning and painting;

(4) manipulation of the sign structure to level or plumb it;

(5) changing of the advertising message;

(6) the replacement of minor parts if the materials of the minor parts are the same type as those being replaced and the basic design or structure of the sign is not altered;

(7) changing all or part of the sign [face] structure but only if materials similar to those of the sign structure [face] being replaced are used; and

(8) upgrading existing lighting for an energy efficient lighting system.

(b) Except as allowed by Transportation Code, §391.038, the [The] following are considered to be customary maintenance activities that may be made but require an amended permit before the initiation of such an activity:

(1) replacement of poles, but only if not more than one-half of the total number of poles of the sign structure are replaced in any 12 month period and the same material is used for the replacement poles; and

(2) adding a catwalk to the sign structure.

(c) The following are examples of substantial changes that may be made but require an amended permit before the initiation of such an activity:

(1) adding lights to an un-illuminated sign or adding additional lights or adding more intense lighting to an illuminated sign whether or not the lights are attached to the sign structure;

(2) changing the number of poles in the sign structure;

(3) adding permanent bracing wires, guy wires, or other reinforcing devices;

(4) changing the material used in the construction of the sign structure, such as replacing wooden material with metal material;

(5) adding faces to a sign or changing the sign configuration;

(6) increasing the height of the sign;

(7) changing the configuration of the sign structure, such as changing a "V" sign to a stacked or back to back sign, or a single face sign to a back-to back sign; and

(8) moving the sign structure or sign face in any way unless the movement is made in accordance with §21.192 of this subchapter [division] (relating to Permit for Relocation of Sign).

(d) To add a catwalk to a sign structure the catwalk must meet Occupational Safety and Health Administration guidelines.

§21.192.Permit for Relocation of a Commercial Sign.

(a) A commercial sign that has been timely removed from a department construction project site may be relocated in accordance with this section, §21.193 of this subchapter [division] (relating to Location of Relocated Commercial Sign)[, §21.194 of this division (relating to Construction and Appearance of Relocated Sign),] and §21.195 of this subchapter [division] (relating to Relocation of Sign within a Certified City [Municipality]) if the sign is legally erected and maintained and will be within the highway right of way as a result of a highway construction project or, under exceptional circumstances as determined by the executive director or the executive director's deputy if the sign is legally erected and maintained and the relocation will further the intended purposes of the Highway Beautification Act of 1965 (23 U.S.C. §§131, 136, 319).

(b) To relocate a sign under this section, the permit holder must obtain a new permit under §21.164 of this subchapter [division] (relating to Decision on Application)[, but the permit fee is waived].

(c) To receive a new permit to relocate a sign under this section, the permit holder must submit a new permit application that identifies that the application is for the relocation of an existing sign due to a highway construction project. The new location must meet all local codes, ordinances, and applicable laws.

(d) The permit holder must receive the permit approving the relocation of the existing sign before applying for an amended permit under §21.174 of this subchapter [division] (relating to Amended Permit) to change the sign structure.

(e) Notwithstanding other provisions of this section, if only a part of a sign will be located within the highway right of way as a result of the construction project, the sign owner may apply to amend the existing permit for the sign to authorize:

(1) the adjustment of the sign face on a monopole sign that would overhang the proposed right of way and the required five foot setback from that location to the land on which the sign's pole is located, including adding a second pole if required to support the adjustment for a legal non-conforming monopole sign;

(2) the relocation of the poles and sign face of a multiple sign structure that is located in the proposed right of way from the proposed right of way and the required five-foot setback to the land on which the other poles of the sign structure are located; or

(3) a reduction in the size of a sign structure that is located partially in the proposed right of way and the required five-foot setback so that the sign structure and sign face are removed from the proposed right of way and the required five-foot setback.

(f) A permit application for the relocation of a sign must be submitted within 36 months after the earlier of the date the original sign was removed or the date the original sign was required to move. The sign owner is required to continue to renew the sign permit and pay the permit renewal fee for the sign to remain eligible for relocation. The relocation permit issued must be maintained in accordance with §21.172 of this subchapter [division ] (relating to Permit Renewals).

(g) To replace an issued and active relocation permit, an operator first must cancel the permit, then must reapply, pay the fee prescribed by §21.175 of this subchapter [division ] (relating to Permit Fees), and obtain approval for the new permit in accordance with subsection (a) of this section. The relocation process must be completed within the time requirements of subsection (f) of this section.

§21.193.Location of Relocated Commercial Sign.

[(a) To receive a new permit for relocation, an existing sign must be relocated on a part of the same parcel of land on which the sign was situated before relocation in a location that is allowed under this section.]

[(b) If the sign owner can demonstrate that the location under subsection (a) of this section is not physically or economically feasible for a sign structure, the sign owner, on approval by the department, may relocate the sign to any other location that is allowed under this subsection. The owner is not entitled to additional relocation benefits under §21.196 of this division (relating to Relocation Benefits) if the sign structure is relocated further than 50 miles from the location of the existing sign.]

(a) [(c)] The location of the relocated sign must be within a zoned commercial or industrial area as described by §21.178 of this subchapter [division ] (relating to Zoned Commercial or Industrial Area) or an unzoned commercial or industrial area, as described by §21.179 of this subchapter [division] (relating to Unzoned Commercial or Industrial Area) except that an unzoned commercial or industrial area may include only one recognized commercial or industrial activity.

(b) [(d)] A sign may not be relocated to a place where it:

(1) can cause a driver to be unduly distracted in any way;

(2) will obscure or otherwise interfere with the effectiveness of an official traffic sign, signal, or device; or

(3) will obstruct or interfere with the driver's view of approaching, merging, or intersecting motor vehicle or rail traffic.

(c) [(e)] A sign may not be relocated to a place that is:

(1) within 500 feet of a public space [park ] that is adjacent to a regulated highway, with the limitation provided under this paragraph applying:

(A) on either side of a regulated highway that is on a nonfreeway primary system; or

(B) on the side of the highway adjacent to the public space [park] if the regulated highway is on an interstate or freeway primary system;

(2) if outside of an incorporated municipality along a regulated highway, adjacent to or within 500 feet of:

(A) an interchange, intersection at grade, or rest area; or

(B) a ramp or the ramp's acceleration or deceleration lane;

(3) for a highway on the interstate or freeway primary system, closer than 500 feet to another permitted sign on the same side of the highway;

(4) for a highway on the nonfreeway primary system and outside of a municipality, closer than 300 feet to another permitted sign on the same side of the highway;

(5) for a highway on the nonfreeway primary system and within the incorporated boundaries of a municipality, closer than 100 feet to another permitted sign on the same side of the highway; or

(6) within five feet of any highway right of way line.

(d) [(f)] A sign, at the time of and after its relocation, must be within 800 feet of at least one recognized governmental, commercial, or industrial activity that is located on the same side of the highway.

[(g) The spacing limitations provided in subsection (e) of this section do not apply to on-premise signs or directional or official signs that are exempted from the application of Transportation Code, §391.031.]

(e) [(h)] A sign may not be relocated from a road regulated under this subchapter [division] to a rural road regulated by Subchapter K of this chapter (relating to Control of Signs along Rural Roads).

(f) [(i)] A relocated sign may not be erected or maintained in a location that violates Health and Safety Code, Chapter 752.

§21.195.Relocation of Commercial Sign within Certified Cities [Municipality].

[(a)] If an existing sign is located within the incorporated boundaries of a municipality that is approved by the department to control commercial signs [outdoor advertising] under §21.200 of this subchapter [division] (relating to Local Control of Commercial Signs) and the sign will be relocated within the incorporated boundaries of the same municipality, permission to relocate the sign must be obtained only from the municipality in accordance with the municipality's sign and zoning ordinances.

[(b) Permission from the municipality to relocate the sign is required to receive relocation benefits from the department under §21.196 of this division (relating to Relocation Benefits).]

§21.197.Discontinuance of Nonconforming Commercial Sign Due to Destruction.

(a) Except as allowed by Transportation Code, §391.038, if [If] a sign is partially destroyed by a natural force outside the control of the permit holder, including wind, tornado, lightening, flood, fire, or hurricane, the department will determine whether the sign can be repaired without an amended permit.

(b) The department may require the sign owner to submit an estimate of the proposed work, including an itemized list of the materials to be used and the manner in which the work will be done. The department will allow the sign to be repaired without an amended permit if the department determines that the damage is not substantial. If the damage is determined to be substantial the sign owner must obtain an amended permit under §21.174 of this subchapter [division ] (relating to Amended Permit).

(c) The department will cancel the existing permit if it determines the damage to the sign is substantial under subsection (g) of this section and an amended permit is not obtained by the sign owner within one year after the date that the department first became aware of the damage.

(d) If a permit is canceled under this section or §21.176 of this subchapter [division] (relating to Cancellation of Permit), the remaining sign structure must be dismantled and removed without cost to the state.

(e) A sign that is totally or partially destroyed by vandalism or a motor vehicle accident may be rebuilt as described on the most recently approved permit application.

(f) If a decision to cancel a permit is appealed, the sign may not be repaired during the appeal process.

(g) Damage is considered to be substantial if the cost to repair the sign would exceed 60 percent of the cost to replace it with a sign of the same basic construction using new materials and at the same location.

(h) If a sign is partially destroyed by a natural force outside the control of the sign owner in an area that receives a state or federal disaster declaration and the sign owner has documentation to show that the sign damage is not considered substantial the sign may be repaired without a prior determination by the department under subsection (b) of this section if the sign is repaired within 180 days after the date of the event and if within 60 days after the date of completion of the repairs, the owner submits to the department:

(1) photos of the partially destroyed sign and the repaired sign; and

(2) a notarized affidavit executed by the sign owner containing:

(A) the permit number of the sign;

(B) a statement that the sign was damaged by the natural force;

(C) a statement that the cost to repair the sign was less than 60 percent of the cost of a new sign with the same basic construction; and

(D) a statement that the sign was repaired in the same configuration and with like materials according to the most recent approved permit.

(i) A sign repaired in violation of this subsection is subject to enforcement and removal.

§21.198.Order of Removal.

(a) If a commercial sign permit expires without renewal, or is canceled or if a [the] sign is erected or maintained in violation of this subchapter [division], the owner of the sign or, if the department cannot after reasonable effort determine the identity or location of the sign owner, the land owner, on a written demand by the department, shall remove the sign at no cost to the state.

(b) If the sign owner, or land owner, does not remove the sign within 45 days of the day that the demand is sent, the department will remove the sign and will charge the sign owner or land owner, as appropriate, for the cost of removal, including the cost of any court proceedings.

(c) The department will rescind a removal demand if the department determines the demand was issued incorrectly.

§21.199.Destruction of Vegetation and Access from Right of Way Prohibited.

(a) A person may not:

(1) trim or destroy a tree or other vegetation on the right of way for any purpose related to this subchapter [division]; or

(2) erect or maintain a sign from the right of way.

(b) The department will initiate enforcement action if the permit holder, or someone acting on behalf of the permit holder, violates this section.

(c) Subsection (a)(2) of this section does not apply to the maintenance of a sign if:

(1) the state right of way is the only available access for a sign on railroad right of way to which §21.150(b) of this subchapter [division] (relating to Continuance of Nonconforming Signs) applies; and

(2) the sign owner notifies the department and obtains approval of the department before accessing the sign for maintenance.

(d) It is not a violation to trim the portion of the tree or vegetation that encroaches onto private property at the private property line as long as the trimming occurs from the private property.

§21.200.Local Control of Commercial Signs.

(a) The department may authorize a political subdivision, as a certified city, to exercise control over commercial [outdoor] signs in its jurisdiction. If the political subdivision receives approval under this section, it will be listed as a certified city and a permit issued by that political subdivision is acceptable instead of a permit issued by the department within the approved area.

(b) To be considered for authorization under this section, the political subdivision must submit to the department:

(1) a copy of its sign regulations;

(2) a copy of its zoning regulations;

(3) information about the number of personnel who will be dedicated to the program and what type of records will be maintained, including whether the political subdivision maintains an inventory of signs that can be provided to the department in an electronic format that is acceptable to the department; and

(4) an enforcement plan that includes the removal of illegal signs.

(c) The department, after consulting with the Federal Highway Administration, shall determine whether a political subdivision has established and will enforce within its corporate limits standards and criteria for size, lighting, and spacing of commercial [outdoor] signs consistent with the purposes of the Highway Beautification Act of 1965, 23 United States Code §131, and with customary use. The size, lighting, and spacing requirements of the political subdivision may be more or less restrictive than the requirements of this subchapter [division] as long as the requirements comply with the federal requirements, such as the prohibition of signs over 1,200 square feet in size and spacing of less than 500 feet. The authorization does not include the area in a municipality's extraterritorial jurisdiction.

(d) The department may meet with a political subdivision to ensure that it is enforcing the standards and criteria in accordance with subsection (c) of this section.

(e) After approval under this section, the political subdivision shall:

(1) provide to the department:

(A) a copy of each amendment to its sign and zoning regulations when the amendment is proposed and adopted; and

(B) a copy of any change to its corporate limits and its extraterritorial jurisdiction, if covered by the approval;

(2) annually provide to the department:

(A) an electronic copy of the sign inventory; and

(B) report of the number of sign permits issued and the status of all pending enforcement actions; and

(3) participate in at least one video conference or teleconference sponsored by the department each year.

(f) The political subdivision may:

(1) set and retain the fees for issuing a sign permit; and

(2) establish the period for which a sign permit is effective.

(g) The department will conduct an on-site compliance monitoring review every two years.

(h) The department may withdraw the approval of a political subdivision given under this section if the department determines that the political subdivision does not have an effective sign control program. The department will consider whether:

(1) the standards and criteria of political subdivision's sign regulations continue to meet the requirements of subsection (c) of this section;

(2) the political subdivision maintains an accurate sign inventory and annually provides the inventory to the department in an electronic format; and

(3) the political subdivision enforces the sign regulations and annually reports enforcement actions as required.

(i) The department may reinstate a political subdivision's authority on the showing of a new plan that meets the requirements of subsection (c) of this section.

§21.201.Fees Nonrefundable.

A fee paid to the department under this subchapter [division] is nonrefundable.

§21.202.Property Right Not Created.

Issuance of a permit or license under this subchapter [division] does not create a contract or property right in the permit or license holder.

§21.203.Complaint Procedures.

(a) The department will accept and investigate all written complaints on a specific sign structure, sign company, or any other issue under the jurisdiction of the highway beautification [outdoor advertising] program.

(b) The complaints can be filed via the department's website or by mail.

(c) If the complaint involves a sign structure or a sign company the department will notify the owner of the sign structure or sign company of the complaint and the pending investigation within 15 days of receipt of the complaint. This notification will include a copy of the complaint and complaint investigation procedures.

(d) If the complaint included contact information, the department will provide the complainant with a copy of the complaint procedures within 15 days of the receipt of the complaint.

(e) If the complaint involves fewer than 10 sign structures the department will investigate the complaint and make a finding within 30 days of the receipt of the complaint. If the complaint involves 10 or more sign structures or is an investigation of a sign company or any other sign [outdoor advertising] matter the department will make a finding within 90 days of the receipt of the complaint.

(f) If the department is unable to meet the deadlines in subsection (e) of this section, the department will notify the complainant, the sign owner, or sign company of the delay and will provide a date for the completion of the investigation.

(g) The department will provide the complainant, sign owner, or sign company the findings of the investigation, which will include whether administrative enforcement actions are being initiated.

§21.204.Administrative Penalties for Commercial Signs.

(a) The department may impose administrative penalties against a person who intentionally violates Transportation Code, Chapter 391 or this subchapter.

(b) The amount of the administrative penalty may not exceed the maximum amount of a civil penalty that may be imposed under Transportation Code, §391.035 and will based on the following:

[(1) $150 for a violation of a permit plate requirement under §21.165 of this division (relating to Sign Permit Plate);]

(1) [(2)] $250 for a violation of:

(A) a registration requirement of §21.162 of this subchapter [division] (relating to Permit Application for Certain Preexisting Commercial Signs); or

(B) erecting the sign at a [the] location other than the location identified by stake or paint [specified on the application], except that if the [actual] sign location as built does not conform to all other requirements the department will seek cancellation of the permit;

(2) [(3)] $500 for:

(A) maintaining or repairing the sign from the state right of way; or

(B) performing customary maintenance on any sign or substantial changes [maintenance] on a conforming sign without first obtaining an amended permit as required by §21.191 of this subchapter (relating to Repair and Maintenance of Commercial Signs); or

(3) [(4)] $1,000 for erecting a sign from the right of way.

(c) In addition to the penalties assessed under subsection (b) of this section, the department may seek to recover the cost of repairing any damage to the right of way done by the sign owner or on the sign owner's behalf.

[(d) Before initiating an enforcement action under this section, the department will notify the sign owner in writing of a violation of subsection (b)(1) or (2)(B) of this section and will give the sign owner 60 days to correct the violation and provide proof of the correction to the department.]

(d) [(e)] Upon determination to seek administrative penalties the department will mail a notice of the administrative penalties to the last known address of the permit holder. The notice must clearly state:

(1) the reasons for the administrative penalties;

(2) the amount of the administrative penalty; and

(3) the right of the holder of the permit to request an administrative hearing.

(e) [(f)] A request for an administrative hearing under this section must be made in writing and delivered to the department within 45 days after the date of the receipt of the notice.

(f) [(g)] If timely requested, an administrative hearing shall be conducted in accordance with Chapter 1, Subchapter E of this title (relating to Procedures in Contested Case), and the imposition of administrative penalties will be abated unless and until that action is affirmed by order of the commission.

(g) An imposed penalty that is not paid within 60 days of the later of the date of receipt of notice from the department or if an administrative hearing is conducted, the date that the imposition is confirmed, will result in the cancelation of the sign's permit as described in §21.176 of this subchapter (relating to Cancellation of Permit).

§21.205.Curable Commercial Sign Permit Violations.

(a) A permit holder commits a curable violation if the permit holder:

(1) abandons a sign, as determined under §21.181 of this subchapter (relating to Abandonment of Sign);

(2) erects an otherwise conforming sign structure the part of which that is closest to a point perpendicular to the right of way is more than 20 feet but less than 50 feet from the location identified by GPS coordinates recorded by the department at permit issuance;

(3) erects a sign structure at a location that does not meet all spacing requirements of this subchapter or as described in the permit application;

(4) makes customary repairs or substantial changes to a conforming sign without obtaining a required amended permit under §21.174 of this subchapter (relating to Amended Permit);

(5) fails to establish legal access from private property in accordance with §21.167 of this subchapter (relating to Erection and Maintenance from Private Property); or

(6) violates any of the provisions of §21.190 of this subchapter (relating to Lighting of and Movement on Commercial Signs).

(b) The department will notify the permit holder in writing of a violation of this section and will give the permit holder 60 days, beginning on the date of receipt of notice of the violation, to correct the violation, provide proof of the correction, and if required, obtain an amended permit from the department.

(c) Examples of proof of correction of a violation include:

(1) acceptable photographs; and

(2) current survey documentation.

(d) If a permit holder who violates this section fails to correct the violation in accordance with this section, the department will cancel the permit in accordance with §21.176 of this subchapter (relating to Cancellation of Permit).

§21.206.Requirements For An Electronic Sign.

(a) On an electronic sign each message must be displayed for at least eight seconds. A change of message must be accomplished within two seconds and must occur simultaneously on the entire sign face.

(b) An electronic sign must:

(1) contain a default mechanism that freezes the sign in one position if a malfunction occurs; and

(2) automatically adjust the intensity of its display according to natural ambient light conditions.

(c) The owner of an electronic sign shall coordinate with local authorities to display, when appropriate, emergency information important to the traveling public, such as Amber Alerts or alerts concerning terrorist attacks or natural disasters. Emergency information messages must remain in the advertising rotation according to the protocols of the agency that issues the information.

(d) The department will share the contact information with the appropriate local authority that has jurisdiction over the location of the electronic sign.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703468

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630


43 TAC §§21.146 - 21.149, 21.151, 21.165, 21.194, 21.196

STATUTORY AUTHORITY

The repeals are proposed under Transportation Code, §201.101, which provides the commission with the authority to establish rules for the conduct of the work of the department, and more specifically, Transportation Code, §391.032, which provides authority to establish rules to regulate the orderly and effective display of commercial signs on primary roads, Transportation Code, §391.0355, which provides authority for the commission to set fees for administrative penalties in association with violation of commercial sign regulations; Transportation Code, §391.065, which provides authority to establish rules to standardize forms and regulate the issuance of commercial sign licenses; and Transportation Code §391.068, which provides authority for the commission to prescribe permit requirements and set fees for commercial sign permits.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapters 391.

§21.146.Exempt Signs.

§21.147.On-premise Sign.

§21.148.Exception to License Requirement for Nonprofit Signs.

§21.149.Nonprofit Sign Permit.

§21.151.Time Proposed Roadway Becomes Subject to Division.

§21.165.Sign Permit Plate.

§21.194.Construction and Appearance of Relocated Sign.

§21.196.Relocation Benefits.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703469

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630


DIVISION 2. ELECTRONIC SIGNS

43 TAC §§21.251 - 21.260

STATUTORY AUTHORITY

The repeals are proposed under Transportation Code, §201.101, which provides the commission with the authority to establish rules for the conduct of the work of the department, and more specifically, Transportation Code, §391.032, which provides authority to establish rules to regulate the orderly and effective display of commercial signs on primary roads, Transportation Code, §391.0355, which provides authority for the commission to set fees for administrative penalties in association with violation of commercial sign regulations; Transportation Code, §391.065, which provides authority to establish rules to standardize forms and regulate the issuance of commercial sign licenses; and Transportation Code §391.068, which provides authority for the commission to prescribe permit requirements and set fees for commercial sign permits.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapters 391.

§21.251.Definition; Exception to Application of Division.

§21.252.Department Determination.

§21.253.Issuance of Permit.

§21.254.Prohibitions.

§21.255.Location.

§21.256.Modification to Electronic Sign.

§21.257.Requirements.

§21.258.Emergency Information.

§21.259.Contact Information.

§21.260.Application of Other Rules.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703470

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630


CHAPTER 31. PUBLIC TRANSPORTATION

The Texas Department of Transportation (department) proposes amendments to §§31.3, 31.11, 31.30, 31.31, 31.36, 31.42 - 31.45, 31.47, 31.48, 31.50, and 31.57, and the repeal of §31.17 and §31.18, all concerning public transportation.

EXPLANATION OF PROPOSED AMENDMENTS AND REPEALS

The proposed revisions address the impact of changes in state statutes and appropriations, revise funding allocation formulas, address the impacts of revised federal program guidance, remove obsolete text, and update references to current authorizing statutes. Certain sections proposed for repeal administered obsolete federal programs.

SUBCHAPTER A, GENERAL

Amendments to §31.3, Definitions, reflect revisions to the Texas Administrative Code in Chapter 31 in accordance with state and federal statutes and federal guidance impacting the department's role in administering public transportation programs and remove references to repealed federal programs. The definition of "Common Rule," paragraph (10) is deleted. The United States Department of Transportation Common Rules have been superseded. The citation to the appropriate federal regulations has been substituted for the term "Common Rule" throughout the amended rules. The amendments delete the definition "job access project" which was used as part of a repealed federal statute and add the definition of "large urban transit district," in accordance with HB 1140, 85th Legislature, Regular Session. The amendments add the definition of "small urban transit district," in accordance with HB 1140, 85th Legislature, Regular Session. In the definition of "welfare recipient," the amendments remove a reference to a repealed federal statute.

SUBCHAPTER B, STATE PROGRAMS

Amendments to §31.11, Formula Program, revise the text to account for statutory changes from HB 1140, 85th Legislature, Regular Session, which revise geographical funding categories, address increases in funding, clarify funding allocation description for urban transit districts in the Dallas-Ft. Worth-Arlington urbanized area, remove an expired section, and require a one-time award in FY 2018 to transition from the old formula to the new formula.

Amendments to §31.11(b)(1) indicate the amount of funds available, allocate a portion of those funds to the new funding category "large urban transit districts," show funds as dollar amounts rather than as percentages, and indicate that if appropriated amounts are less than shown, the funds will be reduced proportionately in each funding category.

Amendments to §31.11(b)(1)(A)(i) clarify the description of four urban transit districts in the Dallas-Ft. Worth-Arlington urbanized area. Instead of a description as "tier one," the text explicitly names these four transit districts. The amendments also include the allocated amounts authorized by statute for each of these transit districts.

Amendments to §31.11(b)(1)(A)(ii) describe funding allocation methodology for the small urbanized areas.

Amendments to §31.11(b)(1)(A)(iii) describe funding allocation methodology for the large urbanized areas. The amendments also include a cap on the population figure used in the formula of 299,999 to allocate funds among all eligible large urbanized areas.

Amendments to §31.11(b)(2) remove a reference to an expired provision and add a one-time provision for FY 2018 that requires an allocation to account for the award of additional funds due to the revised rules and available funds.

SUBCHAPTER C, FEDERAL PROGRAMS

Section 31.17, Section 5316 Grant Program, and §31.18, Section 5317 Grant Program, are repealed because the Section 5316 and Section 5317 grant programs were removed from federal statutes by the previous authorizing legislation, known as MAP-21. Projects under §31.17 and §31.18 have been completed and closed out. No impact of the repeal to existing and potential subrecipients is expected.

Amendments to §31.30, Section 5339 Grant Program, reflect revisions to the department's role in administering the Federal Transit Administration (FTA) Section 5339 program. The department will continue to act as the designated recipient in this program for small urban transit districts. However, the department will exercise its option to have small urban transit districts apply directly to the FTA for those funds, upon notification by the department. This is similar to how the FTA Section 5307 program is handled. The department will continue to determine allocations and administer the Section 5339 program for the rural transit districts.

Amendments to §31.30(c) change the description from "transit agencies" to "transit districts" to improve clarity.

Amendments to §31.30(d)(1) revise the formula to use total vehicle miles as reported by transit districts instead of a formula based upon the expected remaining useful life of each vehicle. The amendments also include a minimum amount of one percent of the total program allocation to be awarded to each transit district.

Amendments to §31.30(d)(2) specify that the department will notify the FTA of the formula allocations.

Amendments to §31.30(d)(3) specify that the department will notify the small urban transit districts of the formula allocations.

Amendments to §31.30(d)(4) authorize transit districts to apply for those funds directly with the FTA.

Amendments to §31.30(e)(1) revise the formula to use total vehicle miles as reported by transit districts instead of a formula based upon the expected remaining useful life of each vehicle. The amendments also include a minimum amount of one percent of the total program allocation to be awarded to each transit district.

Amendments to §31.30(f) refer to the latest federal guidance document and remove the reference to fleet condition.

Amendments to §31.30(g) add that recipient projects must also be linked to the asset management plan.

Amendments to §31.31, Section 5310 Grant Program, revise the text to reflect the revised Code of Federal Regulations for the Section 5310 grant program as a result of changes that occur in the Fixing America's Surface Transportation (FAST) Act.

Amendments to §31.31(d) show there is no distinction between primary and alternate recipients of Section 5310 funds for rural and urbanized areas with a population of less than 200,000. Recipients are urban and rural transit districts, private non-profit organizations, state and local government authorities that coordinate services for seniors and individuals with disabilities, or taxis providing shared-ride service. Recipients that are not transit districts shall coordinate service with transit districts to ensure service does not duplicate existing service.

Amendments to §31.31(e)(2)(A)(ii) clarify the description of vehicles by replacing the term paratransit with smaller accessible vehicles to avoid any confusion with vehicles that are used specifically for the ADA required paratransit service in places with fixed route bus service.

Amendments to §31.31(e)(2)(A)(viii) expand the eligible items to lifts, ramps, and other securement devices to include new technology and to reflect the language in the federal circular.

The amendment to §31.31(e)(2)(A)(x) clarifies the use of the word computer to cover the development of new technology beyond the term microcomputer.

Amendments to §31.31(i)(1) - (2) reflect a change in department procedure. Local stakeholders are consulted during the public outreach process before project selection. Local planning and project development occur as part of the coordinated human service transportation planning process, not as part of Section 5310 public outreach. To increase fairness and equity, the department recommends projects that consider program goals and objectives. The reference to the FTA Circular is updated to 9070.1G.

Amendments to §31.31(i) add paragraph (3) to clarify the requirement for at least 55 percent of the funds allocation to be used for capital expenses, expanding on the existing language that not more than 45 percent of the funds can be used for operating expenses.

Amendments to §31.36, Section 5311 Grant Program, revise the text to describe intent to minimize negative impacts from changes in transit district boundaries, revise the factor used to allocate a portion of the funding from revenue miles to total vehicles miles, revise definitions to more closely follow industry usage, and correct references to implementing regulations. Subsection (b)(5) is added to the list of department objectives to show that transportation district boundary changes are an important factor. This includes changes that occur when Texas counties move from one rural transit district to another or when the counties create a new transit district.

Amendments to §31.36(e)(2)(A)(ii) clarify the description of eligible items for capital expenses.

Amendments to §31.36(e)(2)(A)(ix) and (xiii) revise the language to use the same terminology as used in the federal guidance.

Amendments to §31.36(e)(2)(C)(iv), (e)(3) and (4), and (g) refer to the latest federal guidance document.

Amendments to §31.36(g)(3) add a one-time award to address changes in transit district boundaries as a discretionary allocation award category. Amendments to §31.36(g)(4) change the data element for calculating this award category from vehicle revenue miles to total vehicle miles.

SUBCHAPTER D, PROGRAM ADMINISTRATION

Amendments to §31.42, Standard Federal Requirements; §31.43, Contracting Requirements; §31.44, Procurement Requirements; §31.45 Accounting and Financial Recordkeeping Requirements; §31.46, Reimbursement Procedures; §31.47, Audit and Project Close-Out Standards; and §31.48 Project Oversight, revise the rules to correct references to federal regulations and update a compliance monitoring practice.

Amendments to §§31.42(a), 31.43(b), 31.44(b), 31.45(b), and 31.47(b) refer to the latest federal regulations. Amendments to §31.48(b)(4) refer to the latest federal regulations and remove a reference to a state program that does not apply. The amendment to §31.48(c)(3) changes a description to indicate a current compliance monitoring practice.

SUBCHAPTER E, PROPERTY MANAGEMENT STANDARDS

Amendments to §31.50, Recordkeeping and Inventory Requirements, and §31.57, Disposition, revise the text to correct references to federal regulations.

Amendments to §31.57(c) and (d)(2)(C) refer to the latest federal regulations.

FISCAL NOTE

Brian Ragland, Chief Financial Officer, has determined that for each of the first five years in which the amendments and repeals as proposed are in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the amendments or repeals.

Mr. Eric Gleason, Director, Public Transportation Division, has certified that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the amendments or repeals.

PUBLIC BENEFIT AND COST

Mr. Gleason has also determined that for each year of the first five years in which the sections are in effect, the public benefit anticipated as a result of enforcing or administering the amendments and repeals will be an efficient and effective distribution methodology for additional funds appropriated for public transportation grants, as well as an improved transparency and accountability of administering public transportation programs. There are no anticipated economic costs for persons required to comply with the sections as proposed. There will be no adverse economic effect on small businesses.

PUBLIC HEARING

Pursuant to the Administrative Procedure Act, Government Code, Chapter 2001, the Texas Department of Transportation will conduct a public hearing to receive comments concerning the proposed rules. The public hearing will be held at 9:00 a.m. on October 11, 2017, in the Ric Williamson Hearing Room, First Floor, Dewitt C. Greer State Highway Building, 125 East 11th Street, Austin, Texas 78701-2483 and will be conducted in accordance with the procedures specified in 43 TAC §1.5. Those desiring to make comments or presentations may register starting at 8:30 a.m. Any interested persons may appear and offer comments, either orally or in writing; however, questioning of those making presentations will be reserved exclusively to the presiding officer as may be necessary to ensure a complete record. While any person with pertinent comments will be granted an opportunity to present them during the course of the hearing, the presiding officer reserves the right to restrict testimony in terms of time and repetitive content. Organizations, associations, or groups are encouraged to present their commonly held views and identical or similar comments through a representative member when possible. Comments on the proposed text should include appropriate citations to sections, subsections, paragraphs, etc. for proper reference. Any suggestions or requests for alternative language or other revisions to the proposed text should be submitted in written form. Presentations must remain pertinent to the issues being discussed. A person may not assign a portion of his or her time to another speaker. Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services such as interpreters for persons who are deaf or hearing impaired, readers, large print or Braille, are requested to contact the General Counsel Division, 125 East 11th Street, Austin, Texas 78701-2483, (512) 463-8630 at least five working days before the date of the hearing so that appropriate services can be provided.

SUBMITTAL OF COMMENTS

Written comments on the proposed amendments to §§31.3, 31.11, 31.30, 31.31, 31.36, 31.42 - 31.45, 31.47, 31.48, 31.50, and 31.57, and the repeal of §31.17 and §31.18, may be submitted to Rule Comments, General Counsel Division, Texas Department of Transportation, 125 East 11th Street, Austin, Texas 78701-2483 or to RuleComments@txdot.gov with the subject line "Public Transportation Rules." The deadline for receipt of comments is 5:00 p.m. on October 16, 2017. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed amendments or repeals, or is an employee of the department.

SUBCHAPTER A. GENERAL

43 TAC §31.3

STATUTORY AUTHORITY

The amendments are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department, and more specifically, §456.022, which provides the commission with authority to adopt rules establishing a formula allocating funds among individual eligible public transportation providers.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapters 455, 456, 458, and 461.

§31.3.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Administrative expenses--Include, but are not limited to, general administrative expenses such as salaries of the project director, secretary, and bookkeeper; insurance premiums or payments to a self-insurance reserve; office supplies; facilities and equipment rental; and standard overhead rates.

(2) Allocation--A preliminary distribution of grant funds representing the maximum amount to be made available to an entity during the fiscal year, subject to the entity's completion of and compliance with all application requirements, rules, and regulations applicable to the specific funding program.

(3) Americans with Disabilities Act (ADA)--The Americans with Disabilities Act of 1990 (42 U.S.C. §12101 et seq.), which provides a comprehensive national mandate for the elimination of discrimination against individuals with disabilities. The ADA provides specific requirements related to public transportation.

(4) Asset management plan--The transit asset management plan prepared in accordance with 49 U.S.C. §5326 and certified by the department. The plan includes at a minimum, capital asset inventories and condition assessments, decision support tools, and investment prioritization.

(5) Authority--A metropolitan transit or regional transportation authority created under Transportation Code, Chapter 451 or 452; a city transit department created under Transportation Code, Chapter 453, by a municipality having a population of not less than 200,000 at the time of its creation; or a coordinated county authority created under Transportation Code, Chapter 460.

(6) Average revenue vehicle capacity--The number of seats in all revenue vehicles divided by the number of revenue vehicles.

(7) Capital expenses--Include the acquisition, construction, and improvement of public transit facilities and equipment needed for a safe, efficient, and coordinated public transportation system.

(8) Clean Air Act--The federal Clean Air Act (42 U.S.C. §7401 et seq.), which seeks to protect and enhance the quality of the nation's air resources by promoting and financing reasonable federal, state, and local governmental actions for pollution prevention.

(9) Commission--The Texas Transportation Commission.

[(10) Common Rule --49 C.F.R. Part 18, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments or 49 C.F.R. Part 19, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations.]

(10) [(11)] Contractor--A recipient of public transportation funds through a contract or grant agreement with the department.

(11) [(12)] Department--The Texas Department of Transportation.

(12) [(13)] Designated recipient--The state, an authority, a municipality that is not included in an authority, a local governmental body, another political subdivision, or a nonprofit entity providing rural public transportation services, that receives federal or state public transportation money through the department or the Federal Transit Administration, or its successor.

(13) [(14)] Director--The director of public transportation for the department.

(14) [(15)] Disability--Disability as defined in the ADA (42 U.S.C. §12102), which includes a physical or mental impairment that substantially limits one or more major life activities of an individual.

(15) [(16)] District--One of the 25 districts of the department for a designated geographic area.

(16) [(17)] Employment-related transportation--Transportation to support services that assist individuals in job search or job preparation. Trips to daycare centers, one-stop workforce centers, jobs interviews, and vocational training are examples.

(17) [(18)] Equipment--Tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.

(18) [(19)] Executive director--The executive director of the department.

(19) [(20)] Fare box revenues--Fares paid by riders, including those who are later reimbursed by a human service agency or other user-side subsidy arrangement. This definition includes subscription service fees, whether or not collected on-board a transit vehicle. Payments made directly to the transportation system by a human service agency are not considered to be fare box revenues.

(20) [(21)] Federal Transit Administration (FTA)--The Federal Transit Administration of the United States Department of Transportation.

(21) [(22)] Federally funded project--A public transportation project that is being funded in part under the provisions of the Federal Transit Act, as amended, 49 U.S.C. §5301 et seq., the Federal-Aid Highway Act of 1973, as amended, 23 U.S.C. §101 et seq., or any other federal program for funding public transportation.

(22) [(23)] Fiscal year--The state accounting period of 12 months that begins on September 1 of each calendar year and ends on August 31 of the following calendar year.

(23) [(24)] Good standing--A status indicating that the department's director of public transportation has not sent a letter to an entity signifying the entity is in noncompliance with any aspect of a program.

(24) [(25)] Incident--An intentional or unintentional act that occurs on or in association with transit-controlled property and that threatens or affects the safety or security of an individual or property.

(25) [(26)] Large urban transit district--A local governmental entity or a political subdivision of the state that provides and coordinates public transportation within an urbanized area with a population greater than or equal to 200,000 in accordance with Transportation Code, Chapter 458. This definition includes urban transportation providers under Transportation Code, Chapter 456, that received state money through the department on September 1, 1994. This definition excludes authorities. [Job access project--A public transportation project relating to the development and maintenance of transportation services designed to transport welfare recipients and eligible low-income individuals to and from jobs and activities related to their employment, or as otherwise defined by 49 U.S.C. §5302 or 49 U.S.C. §5316, the Job Access and Reverse Commute program as established under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU).]

(26) [(27)] Like-kind exchange--The trade-in or sale of a transit vehicle before the end of its useful life to acquire a replacement vehicle of like kind.

(27) [(28)] Local funds--Directly generated funds, as defined in the latest edition of the Federal Transit Administration National Transit Database Reporting Manual. Examples include, but are not limited to, passenger fares, special transit fares, purchased transportation fares, park and ride revenue, other transportation revenue, charter service revenue, freight tariffs, station and vehicle concessions, advertising revenue, funds dedicated to transit at their source, taxes, cash contributions, contract revenue, general revenue, and in-kind contributions.

(28) [(29)] Local governmental entity--Any local unit of government including a city, town, village, municipality, county, city transit department, or authority.

(29) [(30)] Local public entity --Includes a city, county, or other political subdivision of the state, a public agency, or an instrumentality of one or more states, municipalities, or political subdivisions of states.

(30) [(31)] Local share requirement--The amount of funds required and eligible to match federally funded projects for the improvement of public transportation.

(31) [(32)] Low-income individual--An individual whose family income is at or below 150 percent of the poverty line, as that term is defined in the Community Services Block Grant Act (42 U.S.C. §9902(2)), including any revision required by that section, for a family of the size involved, or as otherwise defined by 49 U.S.C. §5302 or 49 U.S.C. §5316, the Job Access and Reverse Commute program as established under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users.

(32) [(33)] Metropolitan Planning Organization (MPO)--The organization designated or redesignated by the governor under 23 U.S.C. §134 as the responsible entity for transportation planning in urbanized areas over 50,000 in population.

(33) [(34)] Mobility management--Eligible capital expenses consisting of short-range planning and management activities and projects for improving coordination among public transportation and other transportation-service providers carried out by a recipient or subrecipient through an agreement entered into with a person, including a government entity, under 49 U.S.C. §5301 et seq. (other than §5309 and §5339). Mobility management excludes operating public transportation services and excludes equipment, tires, tubes, material, and reconstruction of equipment and material described as associated capital maintenance in the definition of "capital project" under 49 U.S.C. §5302.

(34) [(35)] Net operating expenses--Those expenses that remain after fare box revenues are subtracted from eligible operating expenses.

(35) [(36)] New public transportation services or alternatives--An activity that, with respect to the New Freedom program:

(A) is targeted toward people with disabilities;

(B) is beyond the ADA requirements;

(C) meets the intent of the program by removing barriers to transportation and assisting persons with disabilities with transportation, including transportation to and from jobs and employment services; and

(D) is not included in a Transportation Improvement Program or Statewide Transportation Improvement Program prior to August 10, 2005.

(36) [(37)] Nonprofit organization--A corporation or association determined by the Secretary of the Treasury of the United States to be an organization described by 26 U.S.C. §501(c), one that is exempt from taxation under 26 U.S.C. §504(a) or §101, or one that has been determined under state law to be nonprofit and for which the state has received documentation certifying the status of the organization.

(37) [(38)] Nonurbanized area--An area outside an urbanized area.

(38) [(39)] Obligated funds--Monies made available under a valid, unexpired contract or grant agreement between the department and a public transportation subrecipient.

(39) [(40)] Private--Pertaining to nonpublic entities. This definition does not include municipalities or other political subdivisions of the state; public agencies or instrumentalities of one or more states; Native American tribes (except private nonprofit corporations formed by Native American tribes); public corporations, boards, or commissions established under the law of any state; or entities subject to control by public authority, whether state or municipal.

(40) [(41)] Project--The public transportation activities to be carried out by a subrecipient, as described in its application for funding.

(41) [(42)] Public transportation--Shared-ride transportation of passengers and their hand-carried packages or baggage on a regular or continuing basis by means of surface or water conveyance by a governmental entity or by a private entity if the private entity receives financial assistance for that conveyance from any governmental entity. This definition includes fixed guideway transportation and underground transportation. This definition excludes services provided by aircraft, ambulances, emergency vehicles, intercity passenger rail transportation, charter bus service, school bus service, sightseeing service, courtesy shuttle service for patrons of one or more specific establishments, or intra-terminal and intra-facility shuttle services.

(42) [(43)] Public transportation safety plan--The agency safety plan prepared in accordance with 49 U.S.C. §5329 and certified by the department.

(43) [(44)] Real property--Land, including improvements, structures, and appurtenances, but excluding movable machinery and equipment.

(44) [(45)] Revenue service--Passenger transportation occurring when a vehicle is available to the general public and there is a reasonable expectation of carrying passengers that directly pay fares, are subsidized by public policy, or provide payment through some contractual agreement. This does not imply that a cash fare must be paid. Vehicles operated in free fare services are considered in revenue service.

(45) [(46)] Revenue vehicle--The rolling stock used in providing transit service for passengers. This definition does not include a vehicle used in connection with keeping revenue vehicles in operation, such as a tow truck or a staff car.

(46) [(47)] Reverse commute project--A public transportation project designed to transport residents of urbanized areas and other than urbanized areas to suburban employment opportunities, or as otherwise defined by 49 U.S.C. §5302 or 49 U.S.C. §5316, the Job Access and Reverse Commute program as established under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users.

(47) [(48)] Ridership--Unlinked passenger trips.

(48) [(49)] Rural area--A nonurbanized area.

(49) [(50)] Rural transit district--A political subdivision of the state that provides and coordinates rural public transportation within its boundaries in accordance with the provisions of Transportation Code, Chapter 458.

(50) [(51)] Senior--An individual who is 65 years of age or older.

(51) Small urban transit district--A local governmental entity or a political subdivision of the state that provides and coordinates public transportation within an urbanized area with a population less than 200,000 in accordance with Transportation Code, Chapter 458. This definition includes urban transportation providers under Transportation Code, Chapter 456, that received state money through the department on September 1, 1994. This definition excludes authorities.

(52) Stakeholders--All individuals or groups that are potentially affected by transportation decisions. Examples include public health, work force, and human service agencies; representatives of transportation agency employees or other affected employees; private providers of transportation; non-governmental agencies; local businesses; advocates for persons in diverse and traditionally underserved communities, such as seniors, individuals with disabilities, and persons with low incomes; and other interested parties.

(53) Subrecipient--An entity that receives state or federal transportation funding from the department, rather than directly from FTA or other state or federal funding source.

(54) Uniform grant and contract management standards--The standards contained in the Texas Administrative Code, Title 1, Chapter 5, Subchapter A, concerning uniform grant and contract management standards for state agencies.

(55) U.S. DOT--United States Department of Transportation.

(56) Unlinked passenger trips--The number of passengers who board public transportation vehicles. A passenger is counted each time the passenger boards a vehicle even though the passenger might be on the same journey from origin to destination.

(57) Urban transit district--A local governmental entity or a political subdivision of the state that provides and coordinates public transportation within an urbanized area in accordance with Transportation Code, Chapter 458. This definition includes urban transportation providers under Transportation Code, Chapter 456, that received state money through the department on September 1, 1994. This definition excludes authorities.

(58) Urbanized area--A core area and the surrounding densely populated area with a population of 50,000 or more, with boundaries fixed by the United States Census Bureau.

(59) Vehicle miles--The miles a vehicle travels while in revenue service, plus deadhead miles. This definition excludes miles a vehicle travels for charter service, school bus service, operator training, or maintenance testing.

(60) Vehicle revenue hours or miles--The hours or miles a vehicle travels while in revenue service. This definition includes layover and recovery, but excludes travel to and from storage facilities, the training of operators prior to revenue service, road tests, deadhead travel, and school bus and charter service.

(61) Vehicle utilization--Average daily passenger trips per revenue vehicle, divided by average revenue vehicle capacity. This definition provides a measure of an individual system's ability to use existing seating capacity.

(62) Welfare recipient--An individual who has received assistance under a state or tribal program funded under the Social Security Act, Title IV, Part A, at any time during the previous three year period before the date on which the applicant applies for a grant under 49 U.S.C. §5307 or §5311, or as otherwise defined by 49 U.S.C. §5307 or §5311[, or under 49 U.S.C. §5316, the Job Access and Reverse Commute program as established under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users].

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703461

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630


SUBCHAPTER B. STATE PROGRAMS

43 TAC §31.11

STATUTORY AUTHORITY

The amendments are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department, and more specifically, §456.022, which provides the commission with authority to adopt rules establishing a formula allocating funds among individual eligible public transportation providers.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapters 455, 456, 458, and 461.

§31.11.Formula Program.

(a) Purpose. Transportation Code, Chapter 456 requires the commission to allocate, at the beginning of each fiscal biennium, certain amounts appropriated for public transportation. This section sets out the policies, procedures, and requirements for that allocation.

(b) Formula allocation. At the beginning of each state fiscal biennium, an amount equal to the amount appropriated from all sources to the commission by the legislature for that biennium for public transportation, other than federal funds and amounts specifically appropriated for coordination, technical support, or other costs of administration, will be allocated to urban and rural transit districts.

(1) If the appropriated amount to which this subsection applies is at least $69,982,134 [$57,482,135 or less], the commission will allocate $7,000,000 to large urban transit districts, $20,118,748 [35 percent of the appropriated amount] to small urban transit districts, and $42,863,386 [65 percent of the appropriated amount] to rural transit districts. If the appropriated amount is less than $69,982,134, the amounts allocated by this paragraph will be reduced proportionately.

(A) Urban funds available under this section will be allocated to urban transit districts as provided by this subparagraph.

(i) If at least $69,982,134 is appropriated as described in paragraph (1) of this subsection, an urban transit district receiving funds under Transportation Code, Section 456.006(b), will be allocated for each year of the biennium an amount equal to the amount received by that district in Fiscal Year 1997. These districts include the cities of Arlington (amount $341,663), Grand Prairie (amount $170,584), Mesquite (amount $142,455), and North Richland Hills (amount $116,134). These allocations will be assigned from the small urban transit district funds. If less than $69,982,134 is appropriated, the amounts allocated by this clause will be reduced proportionately. If more than $69,982,134 is appropriated, an urban transit district to which this clause applies is not eligible for additional funds under paragraph (2) or (3) of this subsection. [Urban funds allocated under this paragraph will be divided into two tiers. Tier one will include urban transit districts that restrict transit eligibility for all public transportation services to seniors and individuals with disabilities. Funding available in tier one is calculated by multiplying the available urban funding by the population of seniors and individuals with disabilities in tier one providers, divided by the service eligible population of urbanized areas receiving funding under this subchapter. Tier two will include urban transit districts that provide any service to the general population. The funds for tier two will be the remaining balance of the available funds after the funds for tier one have been allocated.]

(ii) One-half of the funds allocated to small urban transit districts will be [within each tier provided under clause (i) of this subparagraph will be allocated to urban transit districts as a need based allocation] based on population by using the latest census data available from[, and as defined by,] the U.S. Census Bureau for each small urbanized area relative to the sum of all small urbanized areas. [Any urban transit district whose urbanized area population is 200,000 or greater will have the population adjusted to reflect a population level of 199,999; except that any urban transit district receiving funds in tier one, as described in clause (i) of this subparagraph, will have the population adjusted to reflect a population level of 199,999, or the urbanized area population of the place as defined by the U.S. Census Bureau, whichever is less.]

(iii) One-half of the funds allocated to small urban transit districts [within each tier provided under clause (i) of this subparagraph] will be [allocated to urban transit districts as a] performance-based allocations. One-half of the funds allocated to large urban transit districts will be based on population by using the latest census data available from the U.S. Census Bureau for each large urbanized area relative to the sum of all large urbanized areas served by urban transit districts. A large urban transit district with an urbanized area population of 300,000 or more will have the population adjusted to reflect a population level of 299,999. One-half of the funds allocated to large urban transit districts will be performance-based allocations. [allocation.]

(iv) An urban transit district is eligible for a performance-based allocation under clause (ii) or (iii) of this subparagraph, as appropriate, [funding under this clause] if it is in good standing with the department and has no deficiencies and no findings of noncompliance. The commission will award the performance-based funding based on the following weighted criteria: 30 percent for local funds per operating expense, 20 percent for ridership per capita, 30 percent for ridership per revenue mile, and 20 percent for revenue miles per operating expense. These criteria may be calculated using the urban transit district's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.

(v) [(iv)] If an urban transit district experiences a negative impact in its performance factor calculations due to the acquisition or loss of service area, a natural disaster, including wind, fire, or flood, or an unforeseen anomaly, the department may mitigate that negative impact with an alternate calculation addressing the specific situation. The alternate calculation may be used in subsequent years at the discretion of the department.

(B) Rural funds allocated under this paragraph will be allocated only to rural transit districts in rural areas based upon need and performance as described in clauses (i) and (ii) of this subparagraph.

(i) Sixty-five percent of the funding under this subparagraph will be allocated to rural transit districts as a need based allocation giving consideration to population weighted at 75 percent and on land area weighted at 25 percent for each rural area relative to the sum of all rural areas.

(ii) Thirty-five percent of the funding under this subparagraph will be allocated to rural transit districts as a performance based allocation. A rural transit district is eligible for funding under this clause if it is in good standing with the department and has no deficiencies and no findings of noncompliance. The commission will award the funding by giving equal consideration to local funds per operating expense, ridership per revenue mile, and revenue miles per operating expense. These criteria may be calculated using the rural transit district's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.

(iii) If a rural transit district experiences a negative impact in its performance factor calculations due to the acquisition or loss of service area, a natural disaster, such as wind, fire, or flood, or an unforeseen anomaly, the department may mitigate that impact with an alternate calculation addressing the specific situation. The alternate calculation may be used in subsequent years at the discretion of the department.

(C) Funds allocated under this section and any local funds may be used for any transit-related activity except that an urban transit district not included in a transit authority but located in an urbanized area that includes one or more transit authorities may use funds allocated under this section only to provide up to:

(i) 65 percent of the local share requirement for federally financed projects for capital improvements;

(ii) 50 percent of the local share requirement for projects for operating expenses and administrative costs;

(iii) 50 percent of the total cost of a public transportation capital improvement, if the urban transit district certifies that federal money is unavailable for the proposed project and the commission finds that the proposed project is vitally important to the development of public transportation in the state; and

(iv) 65 percent of the local share requirement for federally financed planning activities.

(D) Subject to available appropriation, no award to an urban or rural transit district under this paragraph will be less than 90 percent of the award to that transit district for the previous fiscal year. All allocations under subsection (b)(1)(A) and (B) of this section are subject to revision to comply with this standard.

(2) A one-time allocation of state funds appropriated for Fiscal Year 2018 will be made to eligible urban and rural transit districts, consistent with the direction from Transportation Code, Section 456.021(a), as amended by H.B. 1140, 85th Legislature, Regular Session, 2017, to address the impacts of revisions to the state funding formula. This paragraph expires August 31, 2018. [If the appropriated amount to which this subsection applies exceeds $57,482,135, the commission will allocate $57,482,135 in accordance with paragraph (1) of this subsection and will allocate all or a part of the excess amount, as necessary to mitigate changes in formula allocations described by subparagraph (A) or (B) of this paragraph, as appropriate, resulting from the application of the 2010 census data.]

[(A) For an urban transit district, a formula allocation impact may be mitigated if, using 2010 performance data, the total allocation to the district for the need based allocation, as described in subsection (b)(1)(A)(ii) of this section, plus the performance based allocation, as described in subsection (b)(1)(A)(iii) of this section, obtained using 2010 census data, is less than the total corresponding allocation to the district obtained using 2000 census data.]

[(B) For a rural transit district, a formula allocation impact may be mitigated if, using 2010 performance data, the total allocation to the district for the need based allocation, as described in subsection (b)(1)(B)(i) of this section, plus the performance based allocation, as described in subsection (b)(1)(B)(ii) of this section, obtained using 2010 census data, is less than the total corresponding allocation obtained using 2000 census data.]

[(C) Allocations under this paragraph are not subject to subsection (b)(1)(D) of this section.]

[(D) This paragraph expires August 31, 2017.]

(3) The commission will award on a pro rata basis, competitively, or using a combination of both any appropriated amount that remains after other allocations made under this subsection. In awarding funds under this paragraph, consideration may be given to coordination and technical support activities, compensation for unforeseen funding anomalies, assistance with eliminating waste and ensuring efficiency, maximum coverage in the provision of public transportation services, funds needed to initiate public transportation service in new designated urbanized areas, adjustment for reductions in purchasing power, reductions in air pollution, or any other appropriate factor. Awards under this paragraph are not subject to subsection (b)(1)(D) of this section in succeeding fiscal years.

(c) Change in service area. If part of an urban or rural transit district's service area is changed due to declaration by the U.S. Census Bureau, or if the service area is otherwise altered, the department and the urban or rural transit district shall negotiate an appropriate adjustment in the funding awarded to that urban or rural transit district for that funding year or any subsequent year, as appropriate. This negotiated adjustment is not subject to subsection (b)(1)(D) of this section.

(d) Unobligated funds. Any money under this section that an urban or rural transit district has not applied for before the November commission meeting in the second year of a state fiscal biennium will be administered by the commission under the discretionary program described in §31.13 of this subchapter (relating to Discretionary Program).

(e) Returned funds. Any money under this section that an urban or rural transit district agrees to return to the department will be administered by the commission under the discretionary program described in §31.13 of this subchapter.

(f) Application. To receive funds allocated under this section, a transit district must first submit a completed application, in the form prescribed by the department. The application must include certification that the proposed public transportation project is consistent with continuing, cooperating, and comprehensive regional transportation planning implemented in accordance with 49 U.S.C. §5301. Federal approval of a proposed public transportation project will be accepted as a determination that all federal planning requirements have been met.

(g) Project evaluation. In evaluating a project under this section, the department will consider the need for fast, safe, efficient, and economical public transportation and the approval of the FTA, or its successor.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703462

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630


SUBCHAPTER C. FEDERAL PROGRAMS

43 TAC §31.17, §31.18

STATUTORY AUTHORITY

The repeals are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department, and more specifically, §456.022, which provides the commission with authority to adopt rules establishing a formula allocating funds among individual eligible public transportation providers.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapters 455, 456, 458, and 461.

§31.17.Section 5316 Grant Program.

§31.18.Section 5317 Grant Program.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703463

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630


43 TAC §§31.30, 31.31, 31.36

STATUTORY AUTHORITY

The amendments are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department, and more specifically, §456.022, which provides the commission with authority to adopt rules establishing a formula allocating funds among individual eligible public transportation providers.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapters 455, 456, 458, and 461.

§31.30.Section 5339 Grant Program.

(a) Purpose. Title 49 U.S.C. §5339 authorizes the Secretary of the U.S. DOT to make grants for bus and bus facilities.

(b) Eligible recipients. Section 5339 funds are available to states and local public entities.

(c) Department role. The department acts as the designated recipient for §5339 grants to §5307 transit districts [agencies] in small urbanized areas [with less than 200,000 population] and §5311 rural transit districts [agencies]. [As the administering agency, the department will:]

(d) Small urban transit districts. The department will:

(1) allocate the available program funds so that each eligible recipient will receive a proportional share of available funding based on the total vehicle miles reported to the department on an annual basis with no eligible recipient receiving less than one percent of the amount available;

(2) notify the FTA of the results of the allocation calculations;

(3) notify the small urban transit districts of the results of the allocation calculations; and

(4) authorize the small urban transit districts to apply directly with the FTA for the funds, due to their status as direct recipients under the FTA §5307 program.

(e) Rural transit districts. The department will:

(1) allocate the available program funds so that each eligible subrecipient will receive a proportional share of available funding based on the total vehicle miles reported to the department on an annual basis with no eligible subrecipient receiving less than one percent of the amount available [allocate the available program funds so that each eligible subrecipient will receive a proportional share of available funding based on the remaining useful life of its public transportation fleet and the cost of replacing that fleet using the department's information system containing transit fleet data];

(2) develop application materials and disseminate information to eligible subrecipients;

(3) prepare the state's funding application and submit the application to the FTA for approval;

(4) negotiate and execute contracts with subrecipients;

(5) prepare requests for federal reimbursement and process payment requests from subrecipients;

(6) monitor and evaluate the progress of local projects, including compliance with federal regulations; and

(7) provide technical assistance to subrecipients as necessary.

(f) [(d)] Eligible assistance categories. Eligible projects are those listed in FTA Circular 5100.1 [9300.1B] or its latest version. [While fleet condition will determine each agency's allocation, §5339 funds can be used for any eligible activity in FTA Circular 9300.1B or its latest version.]

(g) [(e)] Link to asset management plan. At such time as the department implements the requirement of a transit asset management plan, recipient or subrecipient projects must be linked to the asset management plan required by §31.51 of this chapter (relating to Asset Management) and 49 U.S.C. §5326.

(h) [(f)] Reimbursement rates. For reimbursement:

(1) federal funds may be used to defray up to 80 percent of the cost of eligible capital expenditures;

(2) the federal share may increase to up to 85 percent of the net project cost for a project that involves acquiring vehicles for the purpose of complying with the Americans with Disabilities Act or the Clean Air Act; and

(3) the federal share may increase to up to 90 percent for incremental costs related to compliance with the Clean Air Act in areas of air quality non-attainment or with the Americans with Disabilities Act.

(i) [(g)] Local share requirements. The non-federal share may be provided by:

(1) cash from state or local governments;

(2) cash from non-government sources other than revenues from providing public transportation services;

(3) revenues from the sale of advertising and concessions;

(4) an undistributed cash surplus, a replacement or depreciation cash fund or reserve, or new capital;

(5) service agreements with a state, local, or private social service organization; or

(6) transportation development credits.

§31.31.Section 5310 Grant Program.

(a) Purpose. Title 49 U.S.C. §5310 authorizes the Secretary of the U.S. DOT to make grants for the provision of transportation services meeting the special needs of seniors and individuals with disabilities. The governor has designated the department to administer the §5310 program.

(b) Goal and objectives. The department's goal in administering the §5310 program is to promote the availability of cost-effective, efficient, and coordinated passenger transportation services planned, designed, and carried out to meet the special needs of seniors and individuals with disabilities when public transportation is insufficient, inappropriate, or unavailable, using the most efficient combination of financial and other resources. To achieve this goal, the department's objectives are to:

(1) promote the development and maintenance of a network of transportation services for seniors and individuals with disabilities throughout the state, in partnership with local stakeholders;

(2) fully integrate the §5310 program with other federal, state, and local resources and programs that are designed to serve similar populations;

(3) promote public transportation projects that exceed the requirements of the Americans with Disabilities Act (ADA);

(4) promote public transportation projects that decrease the reliance of individuals with disabilities on ADA complementary paratransit services;

(5) promote and encourage local participation, especially by seniors and individuals with disabilities or their advocates, in decision-making;

(6) improve the efficiency, effectiveness, and safety of §5310 transit systems through the provision of technical assistance; and

(7) include private sector operators in the overall plan to provide transportation services for seniors and individuals with disabilities.

(c) Department role.

(1) The department acts as the designated recipient for all §5310 funds appropriated to:

(A) a rural area;

(B) an urbanized area with less than 200,000 population; and

(C) an urbanized area with a population of 200,000 or more, on request of the metropolitan planning organization of the urbanized area and concurrence by the commission.

(2) The department recognizes the subrecipients as partners who shall retain control of daily operations. As the administering agency, the department will:

(A) develop application materials and disseminate information to prospective applicants and other interested parties;

(B) develop evaluation criteria and select projects for funding, with input from local entities and local individuals, in accordance with the standards set forth in subsection (i) of this section;

(C) prepare the state's annual program of projects and funding application and submit that material to the FTA for approval;

(D) negotiate and execute contracts with local §5310 recipients;

(E) prepare requests for federal reimbursement and process payment requests from §5310 recipients;

(F) monitor and evaluate the progress of ongoing transportation operations, including compliance with federal regulations and coordination of services; and

(G) provide technical assistance to §5310 recipients to aid them in improving and coordinating transit services.

(3) Failure to expend funds in a timely manner may cause the department to terminate the grant and re-award the unobligated balance to another project.

(d) Eligible recipients.

(1) Existing rural transit districts and urban transit districts serving a population of less than 200,000, local public entities, private non-profit organizations, state and local government authorities that coordinate services for seniors and individuals with disabilities, or private taxi companies that provide shared-ride taxi service to the public or to special categories of users (such as seniors or individuals with disabilities) are eligible [will be the primary] recipients of funds [for their respective service areas].

(2) For an area included in a rural or urban transit district's service area [not covered by a transit provider or] for which the existing transit district [provider ] is not willing or able to provide the transportation, the director may choose a local public entity or a private organization as a [an alternate] recipient to receive §5310 funds. Private taxi companies that provide shared-ride taxi service to the public or to special categories of users (such as seniors or individuals with disabilities) on a regular basis are also eligible [alternate] recipients. Any recipient that is not a transit district shall coordinate §5310 service with the existing transit district to ensure service is complementary to and not competitive with existing services.

(3) If the department is the designated recipient for an urbanized area with 200,000 population or more, a recipient for that area will be selected from local transportation providers who are transit authorities or eligible alternate recipients under this program.

(e) Eligible assistance categories. The following categories of expenses are eligible for federal reimbursement under the §5310 program.

(1) State administrative expenses. The department may use up to 10 percent of the annual federal program apportionment to defray its expenses incurred for the administration of the §5310 program. State administrative expenses do not require a non-federal match.

(2) Capital expenses.

(A) With department concurrence, eligible items include:

(i) buses;

(ii) vans or other smaller accessible [paratransit] vehicles;

(iii) the acquisition of transportation services under a contract, lease, or other arrangement;

(iv) mobility management;

(v) curb cuts, sidewalks, pedestrian signals or other accessible features;

(vi) radios and communication equipment;

(vii) vehicle shelters;

(viii) [wheelchair] lifts, ramps, and securement devices [restraints];

(ix) vehicle rehabilitation, remanufacture, or overhaul;

(x) computer [microcomputer] hardware and software;

(xi) initial component installation costs;

(xii) vehicle procurement, testing, inspection, and acceptance costs;

(xiii) vehicle extended warranties that do not exceed industry standards;

(xiv) the lease of equipment, provided that the local recipient determines a lease is more cost effective than the purchase of equipment after considering management efficiency, availability of equipment, staffing capabilities, and guidelines on capital leases as contained in 49 C.F.R. Part 639;

(xv) transit-related intelligent transportation systems;

(xvi) the introduction of new technology, through innovative and improved products, into mass transportation; and

(xvii) the acquisition of preventive maintenance services and vehicle parts associated with preventive maintenance services.

(B) For reimbursement:

(i) federal funds may be used to defray up to 80 percent of the cost of eligible capital expenditures;

(ii) the federal share may increase to up to 85 percent of the net project cost for a project that involves acquiring vehicles for the purpose of complying with the Americans with Disabilities Act or the Clean Air Act; and

(iii) the federal share may increase to up to 90 percent for incremental costs related to compliance with the Clean Air Act in areas of air quality non-attainment or with the Americans with Disabilities Act.

(3) Operating expenses.

(A) Operating expenses are costs that are directly tied to systems operations, such as costs for fuel, oil, and replacement parts, and driver, mechanic, and dispatcher salaries.

(B) Operating expenses may be reimbursed at 50 percent of net operating expense.

(f) Local share requirements.

(1) Eligible sources to satisfy local share requirements may be derived from the following:

(A) an undistributed cash surplus, or a replacement or depreciation cash fund or reserve;

(B) a service agreement with a state or local social service or workforce agency, or a private social service organization;

(C) amounts appropriated or otherwise made available to a U.S. department or agency that are eligible to be expended for transportation;

(D) funds to carry out the federal lands highways program established by 23 U.S.C. §204;

(E) funds available under §403(a)(5)(C)(vii) of the Social Security Act (42 U.S.C. §603(a)(5)(C)(vii));

(F) in-kind contributions, volunteer services, and donations attributable to the project if the value is documented and previously approved by the department; or

(G) transportation development credits, with prior department approval.

(2) Funds from any other U.S.DOT program are not eligible for use as local matching funds.

(g) Funding distribution. After the state administrative expenses described in subsection (e)(1) of this section are set aside, funds will be allocated on a formula basis as provided by this subsection.

(1) For urbanized areas with a population less than 200,000, 25 percent of the available funds will be allocated equally, using department district boundaries of the districts that include such an area. To allocate the remaining 75 percent, the department will:

(A) calculate the population of seniors and individuals with disabilities in each of those urbanized areas using the latest census figures available from the United States Census Bureau; and

(B) divide each urbanized area's population of seniors and individuals with disabilities, as determined under subparagraph (A) of this paragraph, by the state's total population for urbanized areas with less than 200,000 population to determine that urbanized area's formula allocation.

(2) For rural areas, 25 percent of the available funds will be allocated equally, using department district boundaries of the districts that include such an area. To allocate the remaining 75 percent, the department will:

(A) calculate the population of seniors and individuals with disabilities in each department district using the latest census figures for counties available from the United States Census Bureau; and

(B) divide each department district's subtotal of the population of seniors and individuals with disabilities, as determined under subparagraph (A) of this paragraph, by the state total of that population in rural areas to determine the district's formula allocation.

(3) For urbanized areas with 200,000 population or more for which the department is the designated recipient, funds will be allocated to the respective urbanized area based on the federal apportionment as published in the Federal Register.

(4) Residual funds.

(A) Urbanized areas with populations of less than 200,000 and rural areas. On completion of the project selection procedures described in subsection (i) of this section, if any portion of the allocation described in paragraph (1) or (2) of this subsection is not needed, the commission or the executive director may distribute the balances, as appropriate, to satisfy unmet needs in other areas of the state. This action may require the department to transfer funds, at the state level, between urbanized and rural areas to fully obligate the state's apportionment.

(B) Urbanized areas with populations of 200,000 or more. On completion of the project selection procedures described in subsection (i) of this section, any unallocated funds for urbanized areas with populations of 200,000 or more will remain in that urbanized area until allocated at a future date.

(h) Application requirements. A prospective applicant must submit an application for §5310 grant funds at the time specified by the department. The application must document the need and demand for passenger transportation services for seniors and individuals with disabilities, and also must document inclusion of the project in the coordinated public transit-human service transportation plan.

(i) Project selection. To select projects, the department will consult with all local parties, including metropolitan planning organizations, and follow the procedures set out in this subsection.

(1) The department [Department personnel] will establish public outreach processes involving[, after consultation with] local stakeholders[, processes for local planning and project development, and public outreach]. In an effort to streamline decision-making processes and maximize coordination opportunities, the department may choose to combine contiguous department district boundaries for stakeholder engagement, project selection, and public outreach. The stakeholder groups should include representatives of the following groups, further defined in FTA Circular 9070.1G [9070.1F], or its latest version:

(A) transportation partners;

(B) passengers and advocates;

(C) human service and work force agencies; and

(D) others, such as emergency management agencies.

(2) In recommending projects, the department will [stakeholder groups should] consider the program goals and objectives set forth in subsection (b) of this section and consider projects that:

(A) leverage existing resources and promote innovation;

(B) are the only public transportation option for the proposed service area;

(C) are sustainable over time;

(D) demonstrate efficient use of resources;

(E) involve partnerships that include organizations [and for-profit transportation providers]; or

(F) provide service continuity.

(3) At least 55 percent of the funds allocated by district boundaries or combination of district boundaries shall be used for capital expenses.

(4) [(3)] Not more than 45 percent of the funds allocated by district boundaries or combination of district boundaries may be used for operating expenses. This cap applies to both urbanized areas and rural areas, respectively.

(5) [(4)] The requirements of this subparagraph apply to all projects recommended for funding.

(A) There must be a demonstrated need for any capital purchases. Examples of items that may be used to demonstrate need include a needs assessment that documents the demand for new services, a vehicle inventory that establishes the need for replacement of older equipment, dispatcher logs that document requests for service that cannot be met with existing equipment, and purchase of service contracts that substantiate the need for additional vehicles.

(B) The proposed applicant must be able to demonstrate its financial and managerial capability to carry out the project. Examples of items that may be used to demonstrate the capability include audited financial statements and review letters from grantor agencies.

(C) Consideration should be given to the applicant's past efforts to coordinate services and related activities with other local entities. Examples showing those efforts include contracts that outline purchase of service agreements, shared maintenance or dispatching functions, and joint training initiatives.

(D) There should be evidence of local support for the proposal. Examples of that evidence include resolutions by local governing bodies and endorsement letters from other organizations or individuals.

(E) The project must be included in the coordinated public transit-human service transportation plan.

(6) [(5)] Based on stakeholder input, department personnel assigned to cover district areas will rank projects in priority order.

(7) [(6)] On receipt of the applications recommended for funding, the director, or the director's designee, will review all funding requests for completeness and compliance with all statutory and program administrative requirements. Following commission approval, the department will negotiate a contract with the selected local entities and organizations to implement the projects selected for funding.

(j) Vehicle leasing. Vehicles acquired under the §5310 program may be leased to other entities, such as local public entities or agencies, other private nonprofit agencies, or private for-profit operators. The lessee shall operate the vehicles on behalf of the §5310 recipient and provide the transportation services as described in the original grant application.

(k) Incidental vehicle use. A vehicle that is purchased with §5310 funds may be used for incidental uses that do not conflict with the primary use of the vehicle to provide transportation services for seniors and individuals with disabilities. Examples of permissible incidental uses are allowing riders who are neither senior nor an individual with a disability to occupy vacant seats, delivering meals, or using the vehicle for other public transportation activities when it is not required for seniors or individuals with disabilities project purposes. The vehicle shall not be altered in any way to accommodate incidental use.

(l) Private for-profit transportation business participation. Taxi companies that provide only exclusive-ride service are not eligible subrecipients; however, they may participate in the §5310 program as contractors. Exclusive-ride taxi companies may receive §5310 funds to purchase accessible taxis under contract with an eligible subrecipient.

§31.36.Section 5311 Grant Program.

(a) Purpose. Section 5311, Federal Transit Act (49 U.S.C. §5311), authorizes the Secretary of the U.S. DOT to make grants for public transportation projects in rural areas. The department has been designated by the governor to administer the §5311 program.

(b) Goal and objectives. The department's goal in administering the §5311 program is to promote the availability of cost-effective, efficient, and coordinated passenger transportation services to the general public in rural areas using the most efficient combination of financial and other resources. To achieve this goal, the objectives of the department are to:

(1) promote the development and maintenance of a network of general public transportation services, including intercity services, in rural areas throughout the state, in partnership with local officials;

(2) fully integrate the §5311 program with other federal, state, and local resources that are designed to serve rural populations;

(3) improve the efficiency, effectiveness, and safety of §5311 systems through the provision of technical assistance; [and]

(4) include private sector operators in the overall plan to provide public transportation services; and[.]

(5) minimize negative impacts from changes in public transportation district boundaries.

(c) Department role. The department acts as the designated recipient for all §5311 funds apportioned to the state and has an oversight responsibility for all rural transit services within the state. The department, however, recognizes the subrecipients as partners who shall retain control of daily operations. As the administering agency, the department will:

(1) develop application materials and disseminate information to prospective applicants and other interested parties;

(2) allocate the available program funds in a fair and equitable manner as described in subsection (g) of this section (the department will not provide §5311 funds to more than one transit system in a geographical area);

(3) develop evaluation criteria and select projects for funding;

(4) prepare the state's annual program of projects and funding application and submit that material to the FTA for approval;

(5) negotiate and execute contracts with local §5311 subrecipients;

(6) prepare requests for federal reimbursement, and process payment requests from §5311 subrecipients;

(7) monitor and evaluate the progress of ongoing transportation operations, including compliance with federal regulations; and

(8) provide technical assistance to §5311 subrecipients to aid them in improving transit services.

(d) Eligible subrecipients. State agencies, local public entities, private nonprofit organizations, Native American tribes and organizations, and operators of public transportation services are eligible to receive §5311 funds through the department. Private for-profit operators of public transportation services may participate in the program through contracts with eligible subrecipients. An entity must be a rural transit district to receive §5311 funds except that private for-profit operators of public transportation services and entities that are not rural transit districts are eligible to receive §5311 funds through the department under the intercity bus program, as set forth in subsections (g)(1) and (i) of this section.

(e) Eligible assistance categories. The following categories of expenses are eligible for federal reimbursement under the §5311 program.

(1) State administrative expenses. The department may use up to 10 percent of the annual federal apportionment to defray its expenses incurred for the administration of the §531l program. These funds may also be used to provide technical assistance to subrecipients. Technical assistance may include project planning, program development, management development, coordination of public transportation projects, and related research. Projects are solicited from subrecipients and other interested parties. State administrative and technical assistance expenses do not require a non-federal match.

(2) Capital expenses.

(A) Eligible items include:

(i) buses;

(ii) vans or smaller accessible [other paratransit] vehicles;

(iii) radios and communications equipment;

(iv) passenger shelters, bus stop signs, and similar passenger amenities;

(v) wheelchair lifts and restraints;

(vi) vehicle rehabilitation, remanufacture, or overhaul;

(vii) preventive maintenance, including all maintenance costs;

(viii) extended warranties that do not exceed the industry standard;

(ix) the public transportation [mass transit] portion of ferry boats and terminals;

(x) operational support such as computer hardware or software;

(xi) installation costs and vehicle procurement, testing, inspection, and acceptance costs;

(xii) construction or rehabilitation of transit facilities, including design, engineering, and land acquisition;

(xiii) facilities to provide access for bicycles to [mass] transit facilities and equipment for transporting bicycles on [mass] transit vehicles;

(xiv) the lease of equipment or facilities, provided that the local subrecipient, with the concurrence of the department, determines that a lease is more cost effective than the purchase of equipment or facilities after considering management efficiency, availability of equipment, staffing capabilities and guidelines on capital leases as contained in 49 C.F.R. Part 639;

(xv) the capital portions of costs for service under contract;

(xvi) joint development projects (FTA Circular 9300.1B, or its latest version, provides guidelines for joint development projects);

(xvii) the introduction of new technology, through innovative and improved products, into mass transportation;

(xviii) transit-related intelligent transportation systems;

(xix) the provision of ADA paratransit service, which shall not exceed 10 percent of the state's annual apportionment of §5311 funds and shall be used only by subrecipients that are in compliance with ADA requirements for both fixed route and demand responsive service;

(xx) mobility management consisting of short-range planning, management activities and projects for improving coordination among public transportation, and other transportation service providers carried out through an agreement entered into with a person, including a governmental authority, but excluding operating expenses; and

(xxi) crime prevention and security.

(B) The capital cost of contracting includes depreciation, interest on facilities and equipment, and those allowable capital costs that would otherwise be incurred directly, including maintenance. No capital assets (vehicle, equipment, or facility) that have any remaining federal interest in them and no items purchased with state or local government funds may be capitalized under the grant agreement.

(C) For reimbursement:

(i) federal funds may be used to reimburse up to 80 percent of eligible capital expenditures;

(ii) the federal share may increase up to 85 percent of the net project cost for a project that involves acquiring vehicles for the purpose of complying with the Americans with Disabilities Act or the Clean Air Act;

(iii) the federal share may increase to up to 90 percent for bicycle equipment or facilities projects or for incremental costs related to compliance with the Clean Air Act or with the Americans with Disabilities Act of 1990; and

(iv) the federal share may also increase in accordance with 23 U.S.C. §120(b)(2) as determined by FTA regarding the area of nontaxable Native American lands, individual and tribal, public domain lands (reserved and unreserved), national forest, and national parks and monuments, with eligibility standards for the higher federal share being defined in FTA Circular 9040.1G [9040.1F], or its latest version.

(3) Project administrative expenses. Costs not directly tied, but essential, to the operations of passenger transportation systems may be reimbursed at up to 80 percent with federal funds. The federal share may also increase in accordance with 23 U.S.C. §120(b)(2) as determined by FTA regarding the area of nontaxable Native American lands, individual and tribal, public domain lands (reserved and unreserved), national forest, and national parks and monuments. Eligibility standards for the higher federal share are defined in FTA Circular 9040.1G [9040.1F], or its latest version.

(4) Operating expenses. Costs directly tied to systems operations, such as costs for fuel, oil, and replacement parts, and driver, mechanic, and dispatcher salaries, may be reimbursed at 50 percent of net operating costs. The federal share may also increase in accordance with 23 U.S.C. §120(b)(2) as determined by FTA regarding the area of nontaxable Native American lands, individual and tribal, public domain lands (reserved and unreserved), national forest, and national parks and monuments. Eligibility standards for the higher federal share are defined in FTA Circular 9040.1G [9040.1F], or its latest version. The local subrecipient must provide a match, either in cash or with in-kind donations.

(5) Planning expenses may be reimbursed at up to 80 percent with federal funds. FTA Circular 8100.1C or its latest version has a complete list of eligible activities, which include:

(A) studies relating to management, planning, operations, capital requirements, and economic feasibility;

(B) evaluation of previous planning projects;

(C) work elements and related activities preliminary to and in preparation for constructing, acquiring, or improving the operations of facilities and equipment;

(D) safety, security, and emergency transportation and evacuation planning; and

(E) coordinated public transit-human service transportation planning.

(f) Local share requirements.

(1) FTA program funds cannot be used as the local share required for §5311 grants.

(2) Cash from local or state programs, donations, or unrestricted federal funds is allowed.

(3) In-kind contributions, volunteer services, and donations are eligible as local share if the value is documented.

(4) For an intercity bus project that includes both feeder service and an unsubsidized segment of intercity bus service to which the feeder service connects, in-kind match may be derived from the costs of a private operator for the unsubsidized segment of intercity bus services for the operating costs of connecting rural intercity bus feeder services. The private operator must agree in writing to the use of the costs of the unsubsidized segment of intercity bus services as in-kind match.

(5) Subrecipients may request transportation development credits be used for all or part of the local match.

(g) Allocation of funds. As part of its administration of the §5311 program, the department is charged with ensuring that there is a fair and equitable distribution of funds within the state (FTA Circular 9040.1G [9040.1F] or its latest version). After subtracting funds for state administrative expenses in accordance with subsection (e)(1) of this section, the department will allocate §5311 funds to local subrecipients in the following manner and order.

(1) Intercity bus allocation. Unless the chief executive officer of the state or the executive officer's authorized designee certifies to the Secretary of the U.S. DOT that the intercity bus service needs of the state are being adequately met, the department will allocate not less than 15 percent of the annual §5311 federal apportionment for the development and support of intercity bus transportation facilities and services providing access and connections to rural areas. If it is determined that all or a portion of the set-aside monies is not required for intercity bus service, those funds will be applied to the formula apportionment process described in paragraph (2) of this subsection. Procedures for determining if a certification of adequacy is warranted are as follows.

(A) The department will review all data on intercity bus service availability, including outstanding requests from intercity operators and rural transit districts, and levels of service.

(B) The department will consult with affected intercity bus service providers and rural transit districts.

(C) The department will consult with other state agencies that have jurisdiction with respect to intercity bus regulation and seek their recommendations as to the adequacy of current service.

(D) Based on the findings of subparagraphs (A), (B), and (C) of this paragraph, the commission, the chief executive officer of the state or the executive officer's authorized designee may certify to the adequacy of intercity bus service.

(2) Need and performance allocation. Excluding the amounts allocated under paragraph (1) of this subsection, the balance of the annual §5311 federal apportionment, plus the remaining balance of previous §5311 federal apportionments, not to exceed $20,104,352, will be allocated to transit providers as described in subparagraphs (A) and (B) of this paragraph.

(A) The need based allocation is 65 percent giving consideration to population weighted at 75 percent and on land area weighted at 25 percent by using the latest census data available from, and as defined by, the U.S. Census Bureau for each rural area relative to the sum of all rural areas.

(B) The performance based allocation is 35 percent. The subrecipient is eligible for funding under this subparagraph if it is in good standing with the department and has no deficiencies and no findings of noncompliance. The commission will award the funding by giving equal consideration to local funds per operating expense, ridership per vehicle revenue mile, and vehicle revenue miles per operating expense. These criteria may be calculated using the subrecipient's annual audit for the previously completed fiscal year, data from other sources, or from the department's records.

(C) Funding stability.

(i) Subject to the available apportionment, no award to a transit district under this paragraph will be less than 90 percent of the award to that transit district for the previous fiscal year. All allocations under subparagraphs (A) and (B) of this paragraph are subject to revision to comply with this standard.

(ii) If a rural transit district experiences a negative impact in its performance factor calculations due to the acquisition or loss of service area, a natural disaster, such as wind, fire, or flood, or unforeseen anomaly, the department may mitigate that impact with an alternate calculation addressing the specific situation. This calculation may be repeated in subsequent years at the discretion of the department.

(3) Discretionary allocation. If the amount of the §5311 federal apportionments exceeds the maximum amount that may be allocated under paragraph (2) of this subsection, a part of that excess, not to exceed 10 percent of the amount computed by subtracting, from the annual §5311 federal apportionment, the funds for state administrative expenses under subsection (e)(1) of this section and funds allocated for intercity bus transportation under paragraph (1) of this subsection, will be available to the commission for award at any time during the fiscal year on a pro rata basis, competitively, [or] a combination of both pro rata and competitive, or as a one-time award to address changes in transit district boundaries. Consideration for the award of these additional funds may include, but is not limited to, coordination and technical support activities, compensation for unforeseen funding anomalies, assistance with eliminating waste and ensuring efficiency, maximum coverage in the provision of public transportation services, adjustment for reductions in purchasing power, furtherance of the department's goals, and reductions in air pollution. An award under this subparagraph will not be considered for the purpose of applying the funding stability allocation process under paragraph (2)(C) of this subsection in succeeding fiscal years.

(4) Total vehicle [Vehicle revenue] mile allocation. Any amount of the annual §5311 federal apportionment that is not otherwise allocated under this subsection will be allocated to rural areas, with the amount allocated to a rural area based on the proportion of total vehicle [revenue] miles for that rural area to the total of total vehicle [revenue ] miles for all rural areas.

(5) Adjustments to allocation.

(A) If part of a transit district's service area is changed due to declaration by the United States Census Bureau or the service area is otherwise altered, the department and that subrecipient shall negotiate an appropriate adjustment in the funding year or any subsequent year, as appropriate. This negotiated adjustment is not subject to the minimum and maximum standards set forth in paragraph (2)(C) of this subsection.

(B) If a previously designated urbanized area is declared rural by the United States Census Bureau, a public transportation subrecipient serving that area must apply for funds in accordance with paragraph (6) of this subsection.

(6) Application and contract. Prior to receiving funds a subrecipient must complete and comply with all application requirements, rules, and regulations applicable to the §5311 program. A completed application must be submitted, in a form prescribed by the department, and document the need and demand for general public passenger transportation services. A contract shall be for no less than 12 months unless authorized by the department.

(h) Program of projects. All projects for a fiscal year will be identified in accordance with the allocation rules included in subsection (g) of this section. After commission approval of the allocation, these projects will be submitted to the FTA as the annual program of projects for the fiscal year.

(i) Intercity bus. For funding from allocations made under subsection (g)(1) of this section, an annual request for proposals will be issued for projects complying with FTA definitions of intercity bus transportation. To ensure a balanced investment in access and connectivity to intercity bus travel, the department may establish investment targets among eligible applicant groups or project types prior to solicitation of project proposals.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703464

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630


SUBCHAPTER D. PROGRAM ADMINISTRATION

43 TAC §§31.42 - 31.45, 31.47, 31.48

STATUTORY AUTHORITY

The amendments are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department, and more specifically, §456.022, which provides the commission with authority to adopt rules establishing a formula allocating funds among individual eligible public transportation providers.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapters 455, 456, 458, and 461.

§31.42.Standard Federal Requirements.

(a) Federal Transit Administration programs are subject to 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [the Common Rule].

(b) The programs are also subject to the program regulations promulgated by the Federal Transit Administration and applicable program circulars.

(c) Changes to federal rules, regulations, and circulars applicable to the programs will be implemented and incorporated into the rules governing the specific program.

§31.43.Contracting Requirements.

(a) Purpose. This section describes contracting standards and related requirements for recipients of state and federal public transportation grant funds.

(b) Standards. The standards contained in 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [the Common Rule] apply to public transportation contracting activities. The department will monitor subrecipient compliance with those standards.

(c) Subcontracts. Subrecipients shall furnish to the department notice of the intent to award a purchase order or contract to any individuals or organizations not a part of the subrecipient's organization when the amount of the purchase meets or exceeds the threshold level in the Government Code or Local Government Code (or greater than $25,000 for those entities not covered by the Government Code or Local Government Code) requiring formal competitive procurement. Purchases shall not be split out to stay below the threshold amount. No subcontract will relieve the subrecipient of the subrecipient's legal responsibilities to the department.

§31.44.Procurement Requirements.

(a) Purpose. This section describes procurement standards and related requirements for recipients of state and federal public transportation grant funds.

(b) Standards. The standards contained in 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [the Common Rule] apply to public transportation procurement activities. All subrecipients shall maintain written procurement policies. Those policies shall, at a minimum, provide the following.

(1) Goods, services and equipment purchases.

(A) Goods, services, or equipment requiring formal competitive procurement in accordance with the applicable provisions in the Government Code or Local Government Code (greater than $25,000 for those entities not covered by the Government Code or Local Government Code) shall require sealed bids or proposals. Bids for computer and radio systems shall include all subcomponents necessary for the system to be operated in the unit cost. Exceptions will be allowed for those entities that are eligible to purchase items through the state open contract procedures.

(B) Goods, services, or equipment not requiring formal competitive procurement in accordance with the applicable provisions in the Government Code or Local Government Code ($25,000 or less for those entities not covered by the Government Code or Local Government Code) do require the solicitation of quotes or offers from at least three sources. Purchases of goods, services, or equipment with a total cost of $3,000 or less do not require quotes or offers from at least three sources but are to be distributed equitably among qualified suppliers. The subrecipient shall retain a written record of these solicitations. Exceptions will be allowed for those entities that are eligible to purchase items through the state open contract procedures.

(2) Real property.

(A) Acquisition of real property shall be accomplished in accordance with federal and state statutes, regulations, and policies. In particular, projects that receive federal funds shall comply with the uniform relocation and real property acquisition standards established in 49 C.F.R. Part 25.

(B) Specific standards for construction and rehabilitation projects will be negotiated as part of the project agreement between the department and the subrecipient.

(3) Records retention. All procurement documents are public information and shall be maintained by the subrecipient for at least three years after grant closeout, or, in the case of a capital project, the life of the asset plus three years.

(c) Department role.

(1) Oversight and approval. The subrecipient shall furnish the department notice of the intent to award a purchase order or contract to any individuals or organizations not a part of the subrecipient's organization when the amount of the purchase meets or exceeds the threshold level in the Government Code or Local Government Code (or greater than $25,000 for those entities not covered by the Government Code or Local Government Code) requiring formal competitive procurement. Purchases shall not be split out to stay below the threshold amount. The subrecipient shall at a minimum provide the following documentation as requested by the department describing the procurement history:

(A) the rationale the subrecipient used for the method of procurement;

(B) the rationale the subrecipient used for the selection of contract type;

(C) the reasons the bidder or proposer was selected; and

(D) the methodology used to determine the contract price, including a cost justification.

(2) Technical assistance. The department will provide vehicle specifications, guidance on competitive procurement procedures, and assistance in developing procurement documentation to a subrecipient upon request. If subrecipients choose to develop their own specifications, they assume full responsibility for ensuring that the specifications do not restrict competition.

§31.45.Accounting and Financial Recordkeeping Requirements.

(a) Purpose. This section describes accounting and financial recordkeeping standards and related requirements for recipients of state and federal public transportation grant funds.

(b) Standards. The contractor's financial management system shall meet or exceed the requirements of 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [the Common Rule]. Those requirements include:

(1) accurate, current, and complete disclosure of the financial transactions of each grant program in accordance with state and federal reporting requirements;

(2) records that identify adequately the source and application of funds for grant-supported activities (records shall contain information pertaining to grant awards and authorization, obligations, commitments, assets, liabilities, outlays, and income);

(3) effective control over and accountability for all funds, property, and other assets (the recipient shall adequately safeguard all assets and shall assure that they are used solely for authorized purposes);

(4) comparison of actual with budgeted amounts for each contract, and relation of financial information to performance or productivity data, including the production of unit cost information;

(5) procedures for determining the eligibility for reimbursement and proper allocation of cost;

(6) accounting records that are supported by source documentation; and

(7) a systematic method to assure timely and appropriate resolution of audit findings and recommendations.

§31.47.Audit and Project Close-Out Standards.

(a) Purpose. This section describes audit and close-out requirements for recipients of state and federal public transportation grant funds.

(b) Audit standards. Contractor audit procedures shall meet or exceed the single audit report requirement of 2 C.F.R. Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [outlined in Office of Management and Budget (OMB) publications as follows: state or local governments follow OMB Circular A-128; and institutions of higher education and other nonprofit organizations follow OMB Circular A-133].

(1) Access. The United States Secretary of Transportation, the Comptroller General of the United States, the executive director of the department, and the State Auditor, and any of their authorized representatives, shall have access to the financial and other project records at all reasonable times during the contract period and for the record retention period for the purpose of making audits, examinations, excerpts and transcripts.

(2) Documentation. The contractor shall maintain financial records, supporting documents, statistical records, and all other records of the public transportation grant.

(3) Records retention. Financial records, supporting documents, statistical records, and all other records of the public transportation grant shall be retained for a period of three years after grant closeout, with the following qualifications.

(A) Litigation. If any litigation, claim, or audit is started before the expiration of the three-year period, the records shall be retained until all litigations, claims, and audit findings involving the records have been resolved.

(B) Nonexpendable property. Records for nonexpendable property acquired with federal or state funds shall be retained for three years after its final disposition.

(C) Transfer of records. The three-year retention requirement is not applicable to the contractor when the records are transferred to or maintained by the federal or state grantor agency.

(D) Procurement records. The three-year retention requirement is not applicable to capital projects covered under §31.44(b)(3) of this chapter.

(4) Project close-outs. The contractor shall make every reasonable effort to complete all project activities and request appropriate reimbursements within the time period specified in the project agreement. Project audits shall also be completed within the specified time period and any findings resolved with all practicable speed. Upon completion of these activities, the contractor shall provide the department written notification of project close-out and the release of any unspent project balances.

§31.48.Project Oversight.

(a) Purpose. This section describes reporting requirements for designated recipients and subrecipients of state or federal public transportation grant funds and monitoring activities to be performed by the department.

(b) Reporting requirements. The subrecipient shall submit reports to the department in a format prescribed by the department within deadlines established by the department.

(1) Incident reports. Subrecipients shall report all incidents that meet criteria established by the department. The subrecipient shall submit the report within five days of the incident or discovery of the incident.

(2) Asset inventory. Each subrecipient shall provide information on state and federally funded equipment as described in §31.50 of this chapter (relating to Recordkeeping and Inventory Requirements).

(3) Charter service. Section 5311 subrecipients shall provide charter service only under the specific circumstances established by the FTA. Operators shall advise the department of any charter service provided and the exemption under which charter service is provided.

(4) Disadvantaged Business Enterprises [and Historically Underutilized Businesses]. Subrecipients shall submit reports in accordance with 49 C.F.R. Part 26, Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs [Chapter 9, Subchapter L of this title (relating to Historically Underutilized Business (HUB) Program)].

(5) Operations reports. All FTA recipients and subrecipients shall submit quarterly and annual operations reports.

(A) Pursuant to the requirements of 49 U.S.C. §5311 and §5335, subrecipients of assistance under §5311 shall submit to the department data required by the department for reporting to the National Transit Database.

(B) Pursuant to the requirements of 49 U.S.C. §5326, subrecipients of FTA assistance through the department shall provide the data required by the department to report on transit asset management.

(C) Pursuant to the requirements of Transportation Code, §456.008(a) and (b), the department will collect monthly data from transit operators in urbanized areas, including transit authorities, and publish annually data on industry utilized standards that best reflect ridership, mileage, revenue by source and service effectiveness. These standards include:

(i) Service efficiency--Operating expense per vehicle revenue hour and operating expense per vehicle revenue mile.

(ii) Cost effectiveness--Operating expense per unlinked passenger trip.

(iii) Service effectiveness--Unlinked passenger trips per vehicle revenue mile and unlinked passenger trips per vehicle revenue hour.

(iv) Safety--Total incidents per 100,000 miles of service and average number of miles between revenue vehicle mechanical system failures that prevent the vehicle from completing a scheduled revenue trip.

(D) Pursuant to the requirements of Transportation Code, §456.008(a) and (b), and 49 U.S.C. §5311, the department will collect monthly from transit operators in rural areas, and publish annually data on industry utilized standards that best reflect ridership, mileage, revenue by source and service effectiveness. These standards include:

(i) Service efficiency--Operating expense per vehicle mile.

(ii) Cost effectiveness--Operating expense per unlinked passenger trip.

(iii) Service effectiveness--Unlinked passenger trips per vehicle mile.

(iv) Safety--Total incidents per 100,000 miles of service and average number of miles between revenue vehicle mechanical system failures that prevent the vehicle from completing a scheduled revenue trip.

(E) Pursuant to the requirements of Transportation Code, §456.008(a) and (b), the department will collect monthly from public transportation providers, as defined in Transportation Code, §461.002, that receive funding under 49 U.S.C. §5310, or §5316 and §5317 (with regard to the grant of funds appropriated under federal authorization bills prior to MAP-21), and publish annually data on industry utilized standards that best reflect ridership, mileage, revenue by source and service effectiveness. These standards include:

(i) Service efficiency--Operating expense per vehicle mile.

(ii) Cost effectiveness--Operating expense per unlinked passenger trip.

(iii) Service effectiveness--Unlinked passenger trips per vehicle mile.

(iv) Any other measure appropriate to the type of project financed using funds from §5310, or §5316 and §5317 with regard to the grant of funds appropriated under federal authorization bills prior to MAP-21.

(6) Significant events. The recipient shall promptly advise the department in writing of events that have a significant effect on the delivery of public transportation services, including:

(A) problems, delays, and adverse conditions that will materially affect the ability to attain program objectives, prevent the meeting of time schedules and goals, or preclude the attainment of project work units by established time periods, accompanied by a statement of the action taken or contemplated and any departmental assistance needed to resolve the situation; and

(B) favorable developments and events that will enable meeting time schedules and goals sooner than anticipated or producing more work units than originally projected.

(7) Miscellaneous reports. Entities receiving funds from either the department or the FTA shall cooperate with the department in providing other information as requested by state and federal funding agencies.

(c) Department monitoring. The department will rely on subrecipient reports as described in subsection (b) of this section as the primary means of monitoring subrecipient performance. In addition, department personnel and the subrecipient at least quarterly will discuss problems encountered by the subrecipient, the subrecipient's need for technical assistance, and other topics related to the provision of public transportation services. Routine monitoring activity will occur in the following areas according to a schedule that accommodates federal deadlines and department and operator workloads. Most, but not all, monitoring activities will occur on a quarterly basis.

(1) Civil rights. The department will monitor subrecipients for compliance with Title VI Civil Rights requirements.

(2) Drugs and alcohol.

(A) Each §5311 subrecipient and each of its subcontractors with safety-sensitive employees shall have policies and programs in place that comply with drug and alcohol standards established by the FTA. The department will monitor subrecipients for compliance with these regulations. In addition, the FTA requires each subrecipient to file a calendar year report (January 1 - December 31) with the department on drug and alcohol testing and compliance activities.

(B) Each §5310 subrecipient, and each §5316 and §5317 subrecipients with regard to the grant of funds appropriated under federal authorization bills prior to MAP-21, shall comply with Federal Motor Carrier Safety Administration requirements for drug and alcohol compliance if it owns a vehicle that requires a commercial driver's license to operate. If the subrecipient also receives §5307 or §5311 funding, the subrecipient shall include §§5310, 5316, and 5317 employees in their FTA testing program.

(3) Fiscal responsibility. A department employee quarterly will [make on-site quarterly visits to] review agency financial records that support requests for payment.

(4) Insurance. Subrecipients of state or federal funds through the department shall insure all facilities, equipment, and vehicles from loss. Checks for appropriate insurance levels will occur at the time the local agency renews its policies.

(5) Maintenance. Subrecipients are required to have written maintenance plans, schedules, and logs to ensure the proper care and longevity of vehicles and facilities in accordance with §31.53(d) of this chapter (relating to Maintenance Requirements). The plans, schedules, and logs are subject to periodic on-site inspection by the department.

(6) Incidental vehicle use. A vehicle purchased with federal or state funds may be used for incidental uses that do not conflict with the primary purposes for which the vehicle was purchased. An example of permissible incidental use is using the vehicle for other public transportation activities when it is not required for project purposes. The vehicle shall not be altered in any way to accommodate an incidental use.

(7) Procurement. The department will work with subrecipients to ensure that procurement activities meet applicable state and federal requirements and that all required documents are received and actions completed in a timely manner. Check sheets will be maintained by the department to ensure all benchmark activities are accomplished in the proper sequence.

(d) Noncompliance. A subrecipient that fails to comply with federal or state law, standard or special grant or subgrant conditions, or contractual agreements on which the grant or subgrant award is predicated, is subject to actions under Chapter 9, Subchapter H of this title (relating to Grant Sanctions).

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703465

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630


SUBCHAPTER E. PROPERTY MANAGEMENT STANDARDS

43 TAC §31.50, §31.57

STATUTORY AUTHORITY

The amendments are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department, and more specifically, §456.022, which provides the commission with authority to adopt rules establishing a formula allocating funds among individual eligible public transportation providers.

CROSS REFERENCE TO STATUTE

Transportation Code, Chapters 455, 456, 458, and 461.

§31.50.Recordkeeping and Inventory Requirements.

(a) Purpose. To protect the public investment in real property and equipment purchased in whole or in part with state or federal public transportation funds administered by the department, subrecipients shall comply with the standards described in this section.

(b) Property records. The subrecipient shall maintain records that include:

(1) a description of the property;

(2) a serial number or other identification number;

(3) the source of the property;

(4) who holds title;

(5) the acquisition date and cost of the property;

(6) the percentage of state and the percentage of federal participation in the cost of the property;

(7) the location, use, and condition of the property; and

(8) any ultimate disposition data, including the date of disposal and sale price of the property.

(c) Inventory. The subrecipient shall cooperate with department representatives in performing at least once every two years a physical inventory of all real property and equipment, as defined in §31.3 of this chapter, purchased in whole or in part with state or federal capital funds administered by the department. However, during the time period between these physical inventories, the subrecipient shall promptly notify the department in writing of all changes in the status of that real property and equipment in order that department records may be kept current. On or before November 1 of each year, the subrecipient shall provide the department with an accurate inventory, including the mileage, of all vehicles used in public transportation service. Property shall remain on the department's and subrecipient's inventories until such time as the property is formally disposed of in accordance with the requirements outlined in §31.57 of this subchapter. Notwithstanding the foregoing, the subrecipient shall, where applicable, be bound by, and shall comply with, the inventory requirements specified in 2 C.F.R Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [the common rule].

(d) Control system. The subrecipient must develop a control system to ensure adequate safeguards to prevent loss, damage, or theft of the property. The subrecipient shall investigate any loss, damage, or theft.

§31.57.Disposition.

(a) Purpose. This section describes the standards that apply to the disposition of equipment purchased in whole or in part with state or federal public transportation funds.

(b) Like-kind exchanges. In the case of like-kind exchanges, the percentage of the department's original contractual interest shall be applied to the fair market value of the equipment being sold at the time of the exchange. That dollar value shall then be transferred as the department's interest in the equipment being acquired and, as appropriate, added to any additional funding provided by the department towards the purchase of the new equipment.

(c) Federal standards. The federal standards contained in 2 C.F.R Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [the Common Rule] shall govern the disposition of real property and equipment purchased under contracts in which the department provides all or part of the local share requirement of federally assisted capital improvements. In cases in which 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [the Common Rule] does not require reimbursement of the federal grantor agency, the department will similarly release the state interest in the capital improvement provided that the state's percentage share of any proceeds derived by the subrecipient in the disposition process shall be used by the subrecipient for public transportation purposes similar to those for which the contract award was originally made. If the subrecipient does not intend to use the state's percentage share of the proceeds for public transportation purposes, those monies shall be refunded as described in subsection (d)(2)(B) of this section. In cases in which 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [the Common Rule] requires reimbursement of the federal grantor agency, the subrecipient shall provide the department a percentage of the proceeds of the disposition equal to the percentage of the state's original investment in the property or equipment. Once disposition is authorized, the subrecipient shall relinquish title to the property through either sale, auction, or transfer to another recipient of FTA funding. The department shall be notified of the disposition and shall be provided information necessary to delete the property from inventory records described in §31.50 of this subchapter (relating to Recordkeeping and Inventory Requirements).

(d) State standards. All real property and equipment obtained through contracts in which the department's contractual interest includes federal funds or state monies shall be governed by the disposition standards contained in paragraphs (1) and (2) of this subsection. The department shall be notified of the subrecipient's intent to proceed with the dispositions and provided information necessary to delete the property from inventory records described in §31.50 of this subchapter. Prior to disposition of property under the terms of this subsection, the subrecipient shall obtain written concurrence from the department and receive disposition instructions. Once disposition is authorized, the subrecipient shall relinquish title to the property through either sale, auction, or transfer to another recipient of FTA or state funding.

(1) Disposition criteria.

(A) Vehicles. Disposition may occur when the current per-unit market value is less than $5,000.

(B) Other equipment. Disposition may occur when the current per-unit market value is less than $5,000.

(C) Real property. When real property is no longer needed for the originally authorized purpose, the subrecipient shall request disposition instructions from the department pursuant to this subsection.

(2) Distribution of disposition proceeds.

(A) Refund not required. In cases in which the disposition criteria contained in paragraph (1)(A) and (B) of this subsection have been met, the department will release its contractual interest in the capital improvement. The department will similarly release its contractual interest in cases in which exceptions are granted for early disposition in accordance with the provisions contained in subsection (e) of this section. However, the department's release of its interest in a capital improvement is contingent upon the subrecipient's assurance that the department's contractually specified percentage share of any proceeds derived by the subrecipient in the disposition process will be used by the subrecipient for public transportation purposes similar to those for which the contract award was originally made. In the case of transfers to non-transit uses, as allowed under 49 U.S.C. §5334(h), the department will release only the federal portion of its contractual interest. The department will consult with FTA as necessary to ensure compliance with federal standards. The state's percentage share shall be refunded as described in subparagraph (B) of this paragraph.

(B) Refund required. In cases in which the disposition criteria contained in paragraph (1)(A) and (B) of this subsection have not been met, but the subrecipient has received authorization from the department to proceed with the disposition of equipment or property, the subrecipient shall provide the department a percentage of the proceeds of the disposition equal to the percentage of the department's original contractual interest in the property or equipment. In cases of real property, as described in paragraph (1)(C) of this subsection, and when exceptions are not granted for early disposition, as described in subsection (e) of this section, the subrecipient shall similarly provide the department a percentage of the proceeds of the disposition equal to the percentage of the department's original contractual interest in the property or equipment. In the case of transfers to non-transit uses, as allowed under 49 U.S.C. §5334(h), the subrecipient shall provide the department a percentage of the proceeds of the disposition equal to the percentage of the original state percentage interest in the property or equipment, excluding any federal percentage interest that might have been included in the contract of assistance. The department will consult with FTA as necessary to ensure compliance with federal standards.

(C) Net proceeds from sale of capital assets. In cases in which 2 C.F.R. Part 200 and Part 1201, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards [the Common Rule] requires a reimbursement, when the subrecipient receives proceeds from the disposition of the capital property or equipment and those funds will be used for subsequent federal public transportation purposes, the subrecipient shall establish a record of liability demonstrating that these funds are owed. The liability will be removed when the subrecipient uses the proceeds for a subsequent transit project.

(e) Exceptions. The department will consider exceptions to this section on a case-by-case basis. The subrecipient must furnish information requested by the department to determine if an exception is warranted due to special circumstances. The department will consult with FTA as necessary to ensure compliance with federal standards.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on August 31, 2017.

TRD-201703466

Joanne Wright

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: October 15, 2017

For further information, please call: (512) 463-8630