PART 1. COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 16. COMPTROLLER GRANT PROGRAMS
SUBCHAPTER A. BROADBAND POLE REPLACEMENT PROGRAM
34 TAC §§16.1, 16.3, 16.4, 16.8 - 16.10, 16.12
The Comptroller of Public Accounts adopts amendments to §16.1 concerning definitions, §16.3 concerning notice and applications, §16.4 concerning eligible applicants, §16.8 concerning reimbursement awards, §16.9 concerning payment, §16.10 concerning requirements, and §16.12 concerning noncompliance, with changes to the proposed text as published in the April 5, 2024, issue of the Texas Register (49 TexReg 2171). The rules will be republished.
The amendments comply with House Bill 1505, §1, 87th Legislature, R.S., 2021, and House Bill 9, §2, 88th Legislature, R.S., 2023, which establish the broadband pole replacement fund and the Texas broadband pole replacement program and require the comptroller to prescribe rules for the program.
The amendments to §16.1 add new definitions and make conforming changes required by House Bill 4595, §24.002, 88th Legislature, R.S., 2023, by updating statutory section references.
The amendments to §16.3 clarify the methods by which the office may provide notice of the availability of grant funds for award. The amendments also include conforming changes required by House Bill 4595, §24.002, 88th Legislature, R.S., 2023, by updating statutory section references.
The amendments to §16.4 describe requirements related to eligible costs and grant eligibility requirements.
The amendments to §16.8 prioritize the deployment of broadband to rural areas and require grant recipients to negotiate and sign a grant agreement prior to issuance of a reimbursement award.
The amendments to §16.9 clarify that the time period within which a reimbursement award must be paid to a grantee starts after a notice of a reimbursement award is issued.
The amendments to §16.10 make conforming changes required by House Bill 4595, §24.002, 88th Legislature, R.S., 2023, by updating statutory section references.
The amendments to §16.12 make conforming changes required by House Bill 4595, §24.002, 88th Legislature, R.S., 2023, by updating statutory section references.
The comptroller received comments from the following organizations, interest groups, and individuals: Texas Cable Association ("TCA"); Texas Electric Cooperatives ("TEC"); and Texas Telephone Association ("TTA").
The comptroller received a comment from TEC regarding the definition of "applicant" contained in §16.1(1). TEC acknowledged the definition was not new or amended but requested that the comptroller amend the term to ensure the participation of electric cooperatives. TEC noted that under the current definition an applicant is defined as a "person" and noted its concern that under the Public Utility Regulatory Act that term specifically excludes electric cooperatives. The comptroller thanks TEC for this comment but notes that under the Code Construction Act a "{p}erson includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity" unless the statute or context in which the word or phrase is used requires a different definition. The statute that governs the pole replacement program does not specify a different definition of "person" nor does it reference the Public Utility Regulatory Act. Therefore, the comptroller does not believe it is necessary to amend the rule as requested.
The comptroller received comments from TCA, TEC, and TTA regarding the proposed definitions for "eligible county" and "rural county" contained in §16.1(5) and §16.1(16) respectively.
TCA submitted extensive comments critical of the proposed definitions and eligibility requirements in §16.4 and urged the comptroller to withdraw the proposed rules. Citing case law, TCA suggested that the proposed definitions exceeded the comptroller's authority because state agencies may not promulgate rules that (1) contravene statutory language; (2) run counter to the general objectives of the statute; or (3) impose additional burdens, condition, or restrictions in excess of or inconsistent with the relevant statutory provisions. See State v. Office of Pub. Util. Counsel, 131 S.W.3d 314 (Tex.App.-Austin 2004, pet. Denied) at 331. TCA objected to population and serviceability thresholds proposed in the definitions for "rural county" and "eligible county" as being inconsistent with the eligibility standards set out in House Bill 1505. Specifically, TCA asserts that the proposed definitions for "rural county" and "eligible county" create eligibility criteria that are inconsistent with the statute because the statutory language only imposes a single condition for reimbursement under the program. TCA quotes statutory language that pole replacement costs are eligible for reimbursement if the pole being replaced is located in an unserved area. See Government Code, §403.553(a)(4). TCA argues that by this language the legislature directed that reimbursements under the program should go to all projects that connect unserved locations no matter where in Texas they are located. Consequently, TCA suggests that by introducing rurality component and imposing serviceability thresholds not contained in the statutory language, the comptroller is impermissibly creating additional conditions in excess of relevant statutory provisions and thereby materially altering the program as enacted by the legislature by excluding otherwise eligible locations from reimbursement under the program.
With respect to rurality, TCA further suggests that the proposed definition for "rural county" is inconsistent with the language of Government Code, §403.553(b), which does not purport to define which projects are eligible for replacement. TCA commented that if the legislature had intended to limit the program to specific rural areas it would have included such a provision and defined such eligible "rural areas" in the statute. However, as TCA acknowledges, Government Code, §403.553(c), delegates wide latitude to the comptroller to administer and implement the pole replacement program including rulemaking authority. And it is well established that an "agency's rules must comport with the agency's authorizing statute, but the legislature does not need to include every specific detail or anticipate all unforeseen circumstances." State v. Office of Pub. Util. Counsel v. Pub. Util. Comm'n of Tex., 131 S.W.3d 314, 321 (citing Railroad Comm'n v. Lone Star Gas Co., 844 S.W.2d 679, 689 (Tex. 1992)). TCA further argued that the language of Government Code, §403.553(b), does not require the comptroller to restrict the program in the proposed manner. Further, TCA suggests that the statutory language is best understood as a general statement of purpose that informs the context of the legislature's decision to create a program for "unserved areas" lacking access to broadband. Under TCA's approach, in which the comptroller withdraws the proposed definitions, a replaced pole that is located in any unserved area, irrespective of the rurality of the area, is eligible for reimbursement under the program. But such a construction would render Government Code, §403.553(b) meaningless which courts disfavor. See City of Rockwall v. Hughes, 51 Sup. Ct. J. 349, 354 (Tex. 2008). It is also a basic tenet of statutory construction that the entire text of a statute is intended to be effective. See Government Code, §311.021(2). In addition, under the rules of statutory construction each sentence, clause, phrase and word is to be given effect, if possible. See Moore v. Sabine National Bank of Port Arthur, 527 S.W.2d 209, 212 (Civ. App.--Austin 1975, ref. n.r.e.). As a result, it cannot be the case that the comptroller may ignore rurality when considering program awards. While the comptroller disagrees with comments suggesting it may ignore rurality, it agrees that the language of the statute does not require the comptroller to restrict program eligibility in the proposed manner.
The comptroller is also mindful of additional comments from TCA that expressed concern that the geographical limits proposed by the comptroller painted with too broad a brush and argued in favor of changes that would expand the eligible areas to reduce the impact of the limits. TCA noted that while rural counties are necessarily rural areas, rural areas may exist in counties that have large cities or are adjacent to counties that have large urban areas. Therefore, TCA favored an approach that evaluated rurality based on project areas proposed by applicants seeking reimbursement. TEC and TTA similarly expressed concern that the proposed definition for "rural county" is overly restrictive. TEC and TTA particularly called out the restriction on eligibility for counties that are adjacent to counties with populations greater than 350,000. TEC noted that many counties that are adjacent to counties that have populations greater than 350,000 are decidedly rural in makeup. TTA echoed this comment, noting that the proposed definition would eliminate from consideration many counties that are sparsely populated. The comptroller acknowledges the concern that its proposed definition may be overly restrictive and may eliminate from consideration many areas that would otherwise be considered rural. To address this concern, instead of pursuing rurality as an eligibility criteria, the comptroller adopts §16.8 with a requirement for the office to prioritize applications based on rurality. Prioritizing rural areas implements Government Code, §403.553(b) stated purpose of "speeding the deployment of broadband to individuals in rural areas" without disqualifying applicants based on a rurality threshold. For the foregoing reasons, and in response to the comments, the comptroller withdraws the proposed definitions for "eligible county" and "rural county" and adopts §16.4 and §16.8 with changes.
TCA was critical of the proposed serviceability threshold contained in the proposed definition for "eligible county" for similar reasons. TTA also expressed reservations regarding inclusion of the proposed serviceability threshold noting that the threshold would eliminate many rural counties from participation in the program. In addition to the impact of the proposed serviceability threshold requirements, TCA noted the practical difficulty of using the criterion to determine eligibility due to ever-changing updates to the National Broadband Map and the impact of broadband grant awards under a wide variety of possible programs. TCA also advanced the opinion that excluding locations in counties would undercut the policy objective of expediting deployment to all unserved areas. Consequently, TCA urged the comptroller to not adopt the serviceability thresholds and withdraw the proposed definition for "eligible counties." Alternatively, TCA noted that limiting reimbursement under the program solely to projects in eligible counties long after the effective date of the statute would undermine substantial investments made by broadband providers in reliance on the program. TCA therefore suggested that if the comptroller proceeded with adopting the proposed eligibility criteria, the comptroller should only apply those changes to pole replacements made after the effective date of the amended rules. The comptroller disagrees with comments suggesting that it is exceeding its rulemaking authority. Under Government Code, §403.553(d), reimbursement of eligible pole replacement costs is limited to an "existing pole in an unserved area." And while the legislature provides a definition for "unserved area" as a location that lacks access to qualifying broadband, the definition leaves the scope of a such a location undefined and does not detail how the comptroller may determine that a location "lacks access" to qualifying broadband. See Government Code, §403.553(a)(4). Therefore, the comptroller believes that the proposed rule is a proper exercise of the comptroller's rulemaking authority in that it provides an objective standard for determining whether an area lacks access to qualifying broadband. However, the comptroller is sensitive to concerns that the proposed rule may be overly restrictive and negatively impact the program eligibility of otherwise eligible locations. Because the comptroller withdraws the proposed definition for "eligible county" that contains the serviceability thresholds, no additional change is needed in response to these comments.
TEC separately commented on the definition for "eligible county" expressing concern that the proposed definition continued to reference an out-of-date speed threshold for broadband service. TEC requested the comptroller amend the rule to reference the internet speed standards adopted by the Federal Communications Commission to track changes at the federal level without necessitating constant state rules changes in a quickly changing technological space. As TEC acknowledges, the comptroller does not have the authority to change the speed thresholds without a change in the statutory language. However, because the comptroller withdraws the proposed definition for the reasons previously discussed, the comptroller declines to amend the proposed rule based on this comment.
TTA additionally commented on the proposed definition of "eligible county" contained in §16.1(5) explaining that the definition creates ambiguity surrounding which state and federal grant programs would be considered by the office when evaluating area eligibility. TTA acknowledged that the proposed definition finds its genesis in statutory language but suggested that enumerating the state and federal programs would eliminate the ambiguity surrounding eligibility. The comptroller acknowledges this concern but notes that it withdraws the proposed definition for the reasons previously discussed. Therefore, the requested change is no longer necessary and the comptroller declines to make a change to the proposed rule based on this comment.
The comptroller received a single comment regarding application considerations contained in §16.3. TEC sought clarification on whether the BDO will evaluate applications on a first come, first served basis or take a different approach in its review. TEC recommended that applications received close in time to one another be competitively compared as opposed to a first-in first-out approach based on its concern that a first-in first-out approach would unduly favor applicants with greater resources and capabilities than smaller applicants. The comptroller believes that the specific evaluation criteria it will use to review applications should be left to individual notices of funding availability that will be issued at a later date. However, the comptroller anticipates that applications for reimbursement will be accepted during defined periods and will be rank-ordered based on evaluation criteria contained in any notices of funding availability. No change is needed in response to this comment.
The comptroller received a single comment regarding the negotiation requirements contained in §16.8. TEC requested the addition of clarifying language to explain the negotiation process in greater detail so that all applicants and affected third parties understand their roles and responsibilities. The comptroller agrees with this comment and adopts the rule with changes to §16.8 to clarify that the intended participants in the negotiation are the grant recipient and the office and a conforming change to §16.9.
The amendments are adopted under Government Code, §403.553(c), which requires the comptroller to prescribe rules for the Texas broadband pole replacement program.
The amendments implement Government Code, Chapter 403, Subchapter S, concerning infrastructure and broadband funding.
§16.1.Definitions.
The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Applicant--A person that has submitted an application for a reimbursement award under this subchapter.
(2) Broadband serviceable location--A business or residential location in this state at which qualifying broadband service is, or can be, installed, including a community anchor institution.
(3) CCPF--The Coronavirus Capital Projects Fund (42 U.S.C. §804), established by §604 of the Social Security Act, as added by §9901 of the American Rescue Plan Act of 2021, Pub. L. No. 117-2.
(4) Eligible broadband facility--Has the meaning assigned by Government Code, §403.553(a)(1).
(5) Eligible pole replacement cost--Has the meaning assigned by Government Code, §403.553(a)(2).
(6) Grant recipient or Grantee--An applicant that receives a reimbursement award under this subchapter.
(7) Grant funds--Monies in the pole replacement fund.
(8) NOFA--Notice of Funding Availability.
(9) Office--The Broadband Development Office established within the comptroller's office under Government Code, Chapter 490I.
(10) Pole--Has the meaning assigned by Government Code, §403.553(a)(5).
(11) Pole owner--Has the meaning assigned by Government Code, §403.553(a)(6).
(12) Pole replacement fund--Has the meaning assigned by Government Code, §403.551(1).
(13) Pole replacement program--Has the meaning assigned by Government Code, §403.551(2).
(14) Qualifying broadband service--Has the meaning assigned by Government Code, §403.553(a)(3).
(15) Unserved area--Has the meaning assigned by Government Code, §403.553(a)(4).
§16.3.Notice and Applications.
(a) The office shall use one or more methods as necessary to provide notice of the availability of funds for award under this subchapter including publication in the Texas Register or on the Electronic State Business Daily website. The comptroller may make available a copy of the NOFA on the comptroller's website.
(b) The NOFA published under subsection (a) of this section may include:
(1) the total amount of grant funds available for reimbursement awards;
(2) the minimum and maximum amount of grant funds available for each application;
(3) limitations on the geographic distribution of grant funds;
(4) eligibility requirements;
(5) application requirements;
(6) reimbursement award and evaluation criteria;
(7) the date by which applications must be submitted to the office;
(8) the anticipated date of reimbursement awards; and
(9) any other information the office determines is necessary for award.
(c) All applications for a reimbursement award submitted under this subchapter must comply with the requirements of Government Code, §403.553(g), and any requirements contained in a NOFA published by the office.
(d) An application for funding under this subchapter shall be submitted on the forms and in the manner prescribed by the office. The office may require that applications be submitted electronically.
(e) The office may require applicants to submit preliminary information to the office prior to submitting a completed application for a reimbursement award to enable the office to determine each applicant's eligibility to apply for a reimbursement award and to compile aggregate information that applicants may use in determining whether to complete the application process.
(f) During the review of an application, an applicant may be instructed to submit to the office additional information necessary to complete the review. Such requests for information do not serve as notice that the office intends to fund an application.
§16.4.Program Eligibility Requirements; Eligible Applicants; Costs.
(a) The office may award grant funds for actual and reasonable costs paid or incurred by an eligible applicant to remove and replace a pole in an unserved area.
(b) An applicant is eligible to apply to the office for a reimbursement award under this subchapter if the applicant:
(1) is a pole owner or a provider of qualifying broadband service;
(2) pays or incurs eligible pole replacement costs of removing and replacing an existing pole in an unserved area for the purpose of accommodating the attachment of an eligible broadband facility; and
(3) otherwise meets eligibility criteria in a NOFA published under §16.3 of this subchapter.
(c) Eligible costs include the amount of any expenditures to remove and dispose of the existing pole, purchase and install a replacement pole, and transfer any existing facilities to the new pole.
(d) Costs that an applicant incurs that have been or will be reimbursed to the applicant by another party ultimately responsible for the costs are not eligible for reimbursement under this subchapter.
(e) An award under this subchapter may not exceed:
(1) The lesser of 50% of the eligible pole replacement costs paid or incurred by the applicant or $5,000, whichever is less, for the pole replaced; plus
(2) the documented and reasonable administrative expenses incurred by the applicant in preparing and submitting the reimbursement application.
(f) The amount reimbursed under subsection (e)(2) of this section may not exceed 5.0% of the eligible pole replacement costs in the application.
§16.8.Reimbursement Awards.
(a) The office shall make a determination and provide notice of a reimbursement award or a notice of denial to an applicant not later than 60 calendar days after the date that the office receives a completed application from the applicant. An application will not be considered complete for purposes of this section unless an applicant has provided all the information necessary for the office to review the application, including any additional information requested by the office to complete the review.
(b) The office shall prioritize, and may give preference to, applications for pole replacement costs for poles located in rural areas.
(c) All grant funding decisions made by the office are final and are not subject to appeal.
(d) The approval of a reimbursement award shall not obligate the office to make any additional, supplemental, or other reimbursement award.
(e) The office shall provide notice of award to a successful applicant and, as applicable, the pole owner and the retail broadband service provider attaching the eligible broadband facility.
(f) After receiving notice of award, a grant recipient shall have 30 calendar days from receiving the notice of award to negotiate the terms of the grant agreement between the grant recipient and the office and to sign the grant agreement. The comptroller may extend the deadline to fully execute the grant agreement upon a showing of good cause by a grant recipient. If the grant agreement is not signed by the grant recipient and received by the office by the later of the 30th day after the award of the grant agreement or the extended deadline date, the office may rescind the award.
(g) The office shall issue the award after the grant agreement is fully executed by the grant recipient and the office.
§16.9.Payment.
A reimbursement award must be paid to a grant recipient not later than 30 calendar days after the date the office issues an award under §16.8(g) of this subchapter.
§16.10.Requirements.
(a) The administration and use of a reimbursement award are subject to:
(1) the terms and conditions of the reimbursement award;
(2) the requirements of Government Code, Chapter 403, Subchapter S; and
(3) any other state or federal law, rule, regulation, or guidance applicable to the type of funding used to make the reimbursement award.
(b) Grant funds may be used only for the purpose of supporting the pole replacement program, including the costs of program administration and operation.
(c) A grantee is the entity legally and financially responsible for compliance with state and federal laws, rules, regulations, and guidance applicable to the reimbursement award.
(d) Grant funds shall not be used for costs that will be reimbursed by any other federal or state funding source. The office may require an applicant/grantee to demonstrate through accounting records that funds received from another funding source are not used for costs that will be reimbursed by the pole replacement program.
§16.12.Noncompliance.
(a) If the office has reason to believe that a grantee has violated any term or condition of a reimbursement award or any applicable laws, rules, regulations, or guidance relating to the reimbursement award, the office shall provide written notice of the allegations to the grantee and provide the grantee with an opportunity to respond to the allegations.
(b) If the office finds on substantial evidence that a grantee has materially violated the requirements of Government Code, §403.553, with respect to reimbursements or portions of reimbursements, the office may direct the grantee to refund the reimbursement or a portion of the reimbursement with interest at the applicable federal funds rate as specified by Business and Commerce Code, §4A.506(b).
(c) If the office finds that a grantee has failed to comply with any term or condition of a reimbursement award, or any applicable laws, rules, regulations, or guidance relating to the reimbursement award, other than the requirements described in subsection (b) of this section, the office may:
(1) direct the grantee to refund the reimbursement award or a portion of the reimbursement award;
(2) withhold reimbursement award amounts to a grantee under this subchapter pending correction of the deficiency;
(3) disallow all or part of the cost of the activity or action that is not in compliance;
(4) terminate the reimbursement award in whole or in part;
(5) prohibit the grantee from being eligible for future reimbursement awards under the pole replacement program; or
(6) exercise any other legal remedies available at law.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on July 8, 2024.
TRD-202403000
Victoria North
General Counsel for Fiscal and Agency Affairs
Comptroller of Public Accounts
Effective date: July 28, 2024
Proposal publication date: April 5, 2024
For further information, please call: (512) 475-2220