TTA also commented on §16.36(f) regarding the use of the term "location" in two places which they suggested should be preceded with the term "broadband serviceable" for the sake of clarity. The comptroller agrees with this comment and will adopt the proposed rule with changes accordingly.

TCA and TTA commented that the use of the term "designated area" in §16.36(h) should be replaced with "project area" to conform with changes made in Senate Bill 1238. The comptroller agrees with these comments and will adopt the proposed rule with changes accordingly. TTA further commented that the definition of "interested party" contained in §16.36(h) should include applicants. The comptroller notes that the definition for "interested party" is very expansive and already includes a broadband service provider who proposes to provide broadband services in the project area. Therefore, the comptroller does not believe a change to the proposed rule is needed based on this comment.

The comptroller received several comments regarding new §16.36(i). TEC and CCECA supported inclusion of the requirement for broadband service providers to submit required information regarding enforceable federal commitments under Government Code, §490I.01061(b), as a prerequisite for submitting a challenge of another applicant's application. TEC further remarked that while statutory language requires a broadband service provider to submit certain information, the statute is silent as to other consequences for failure to provide that information. TEC reiterated its concerns over the apparent strategy of some broadband providers to include areas that overlap with cooperative provider territories to garner additional funding without a true plan to actually serve customers in those areas. TEC noted that as a result, those areas are "locked up" and ineligible for further funding. TEC added that the information provided under Government Code, §490I.01061 is vital to prevent gaming the system and also ensure the equitable expansion of service and allocation of funding. Therefore, TEC urged the comptroller to consider reclassifying those areas for which the comptroller does not receive the required information as eligible. The plain language of §490I.01061 prohibits the comptroller from awarding a grant to a location that is subject to an existing federal commitment and only provides for a limited exception if the federal funding is forfeited or the recipient is disqualified from receiving federal funding. Consequently, the comptroller does not have the authority to reclassify an area subject to an existing federal commitment based on noncompliance with §490I.01061 and therefore lacks the authority to amend the proposed rules as suggested by these comments.

Harris County opined that the new rule, which replaces language in repealed §16.35(c), does not make broadband service providers sufficiently accountable for their lack of compliance with requests for information under Government Code, §490I.0105 or §490I.01061. Under the previous rule, a broadband service provider that did not provide the requested information was barred from participating in the program. Harris County supported retaining language that bars noncompliant providers from participation in the program. TEC also recommended prohibiting entities that do not provide the requested information from receiving any funding from the broadband development program. CCECA echoed TEC's comments but went further by requesting that the comptroller consider a rule that would make it clear that any application submitted by a broadband service provider that does not provide the required information would be denied. The comptroller agrees with comments suggesting the comptroller has the discretion to impose sanctions for noncompliance that go beyond the limited sanction imposed by statute in which a noncomplying broadband service provider may not submit an application protest. That said, the comptroller does not have the authority to prohibit an applicant from participating in the program because the plain language of Government Code, §490I.01061 requires grant recipients to provide information regarding existing federal commitments. While the comptroller agrees with comments suggesting that a grant recipient that does not provide the required information should be subject to additional possible sanctions, the statute and rules already provide this authority. Therefore, the comptroller declines to make changes based on these comments.

The comptroller received two additional comments regarding §16.36(i). TEC advocated for greater transparency regarding existing federal commitments and recommended that the BDO should make public any information it receives regarding existing enforceable commitments. TEC noted that greater transparency regarding existing federal commitments and the timelines for deployment would assist broadband providers developing their own expansion plans and would provide consumers assurance that public funds will be appropriately leveraged. The comptroller agrees that transparency is needed to ensure that the public has information about the deployment plans of broadband service providers who have existing federal commitments. However, the comptroller notes that the requested information would already be subject to the Public Information Act. For these reasons, the comptroller declines to amend the rule based on this comment. TTA also commented on §16.36(i) requesting that the comptroller permit entities to use a representative to provide the required information. The comptroller does not believe a change to the proposed rule is necessary based on this comment because the rule does not prohibit an entity from using a third party to assist them in providing the required information.

The comptroller received several comments regarding how overlapping project areas would be deconflicted under §16.37. TTA commented generally that the rule should contain defined criteria for deciding between applicants and recommended factors such as past performance metrics, build out time frames, consumer satisfaction ratings, scalability, proven redundancy and reliability. TEC noted that using set criteria will provide transparency to the decision-making process and give applicants a sense of their standing while actively encouraging better performance by providers and rewarding those with better track records of service when separate applications contain overlapping territory. The comptroller agrees with the need for set criteria but notes under the proposed rule the deconfliction decision is not based on a subjective comparison between applicants but is instead based upon a detailed comparison of the proposed projects using the criteria contained in the applicable NOFA. Therefore, the comptroller does not believe a change to the proposed rule is needed based on this comment.

TCA commented unfavorably on §16.37(d) which gives the BDO the discretion to remove an application from consideration where area deconfliction resulted in more than half of the original project locations being removed. TCA advocated for removing this discretion in favor of allowing applicants to choose whether to proceed with a substantially reduced application. The comptroller disagrees with removing the BDO's discretion to remove an application from further consideration in circumstances where the scope of an application is substantially reduced; however, the comptroller agrees that before deciding to remove an application from further consideration the BDO should take into account whether an applicant would like to proceed with a substantially reduced application. The comptroller adopts the proposed rule with changes to require the comptroller to notify the applicant of a substantially reduced application before removal.

TTA commented on §16.37(e) recommending that the threshold for the size of an area after an overlapping location is removed should be clarified to be greater than 50 percent of the broadband serviceable locations in the original project area to make it clear that a geographic area is not being used for the calculation. The comptroller agrees with this comment and adopts the proposed rule with changes accordingly.

GVEC, TCA and TTA commented on the amendment period contained in §16.37(f). All three commenters requested that the comptroller extend the amendment period to allow applicants sufficient time to prepare and submit a revised application. While the comptroller believes 10 business days is sufficient time to submit an amended application without challenged locations as contemplated by the proposed rule, the comptroller recognizes that there may be circumstances in which additional time may be required. Therefore, the comptroller is withdrawing the proposed change that would make removing an application from consideration obligatory to allow the comptroller the discretion to extend the required deadline on a case-by-case basis.

In line with comments GVEC provided regarding §16.37(f), GVEC requested the comptroller to consider extending the amendment deadlines contained in §16.38(b). TTA also commented on §16.38 noting that the time required for noncommercial applicants to amend their applications to eliminate overlapping locations should be extended to 30 calendar days. The comptroller disagrees with this comment because it believes 10 business days is sufficient time to resubmit an application without overlapping locations. In addition, the current rule provides the necessary flexibility for the comptroller to extend the required deadline on a case-by-case basis because it permits, but does not require, the BDO to remove an application from consideration if the deadline is not met. As previously outlined in its response to comments regarding §16.37(f), the comptroller is withdrawing the proposed change to §16.37(f) to retain this flexibility. Finally, because the comptroller has not proposed amendments to that rule the comment is outside the scope of the current rulemaking. Therefore, the comptroller declines to make changes based on this comment.

The comptroller received many comments regarding the evaluation criteria contained in §16.40.

TTA commented that the term "broadband service" as used in §16.40(a) should be updated to be "qualifying broadband service" to be consistent with the objectives of the statute. TTA also recommended inclusion of specific, higher speed and latency requirements that should be applicable to applications that expand access to broadband in schools because, in their opinion, the preference was intended to be given to broadband service that is faster than qualifying broadband service to schools. The comptroller disagrees with these comments because the rule language closely follows the applicable statutory language, and the comptroller may not restrict a mandatory preference established by the legislature. Therefore, the comptroller declines to make a change to the proposed rule based on these comments.

TCA also commented that the language contained in §16.40(a)(3) afforded the BDO too much discretion to set speed, latency, reliability, consistency, scalability, and related criteria outside of rule noting that this negatively impacted certainty and confidence in the process. TCA therefore urged the comptroller to limit the criteria the office may consider to criteria established by rule. The comptroller disagrees with this comment. The text of the proposed rule mirrors the statutory language contained in Senate Bill 1238 which contemplates the need for the comptroller to establish applicable criteria in notices of funding availability. For this reason, the comptroller declines to make changes to the proposed rule based on this comment.

TCA and TTA commented generally on the use of the term "designated area" throughout §16.40(b) and recommended updating where needed to align with changes made in Senate Bill 1238. The comptroller disagrees with this comment as it relates to §16.40(b)(5). In that section, the rationale for using the term designated area (county) remains notwithstanding the map changes resulting from Senate Bill 1238, i.e., assessing the impact of a proposed project in a designated area. However, the comptroller agrees with this comment as it relates to §16.40(b)(6) and (8) and adopts the proposed rule with changes.

Several commenters including AT&T, TCA, TEC, and TTA commented on the evaluation criteria contained in §16.40(b). TEC commented that, given the underlying policy goal of delivering high speed internet and increasing coverage of reliable internet service across the state, it makes little sense to not make delivery of highspeed internet a mandatory consideration when evaluating a project for award. TEC therefore recommended making speed considerations a mandatory provision under subsection (a). The comptroller notes that the purpose of subsections (a) and (b) is to respectively outline the statutorily imposed criteria that the BDO must prioritize during the application evaluation process and the criteria for which the comptroller may provide a preference. The inclusion of broadband transmission speeds in §16.40(b)(2) is not intended to provide a preference for meeting required minimum broadband service speeds but instead to provide notice that the BDO may give a preference to applications in which the technical specifications exceed the required minimum. Therefore, the comptroller does not believe a change to the proposed rule is needed based on this comment.

TCA commented that §16.40(b)(5) should be amended to allow the prioritization to be based on the proportion of unserved and underserved locations in a proposed project area and not the proportion in the designated area (county) in which the project is located. The comptroller disagrees with this comment because the preference is intended to measure the cost effectiveness and impact of a proposed project - in this case the proportion of locations to be served by the project compared to the number of serviceable locations within the designated area(s) measures the percentage of increased coverage in the designated area. For this reason, the comptroller declines to make a change to the proposed rule based on this comment.

TCA strongly opposed inclusion of renumbered §16.40(b)(7) which permits the BDO to consider community, non-profit, or cooperative involvement or participation in a project. TCA observed that the enabling statutes do not contain such a preference and argued that inserting a preference for non-commercial projects runs contrary to the intent to prioritize commercial providers. As an alternative to repeal, TCA advocated for amending the rule to clarify that it reflects community "support" for a project rather than "involvement" in a project. The comptroller respectfully disagrees with the comment that a consideration of community participation conflicts with the commercial provider preference established by Government Code, §490I.0106(d)(2). The commercial provider preference is limited to a mandatory priority between commercial and noncommercial provider applications seeking funding for the same broadband serviceable locations. It neither requires the comptroller to provide a global preference for commercial provider applications, nor prohibits the comptroller from establishing additional, non-conflicting preferences. The comptroller believes local community participation and support of an application is a non-conflicting preference and is an important factor to consider when evaluating applications. Such participation is evidence that a proposed project considers the particular, local community broadband needs and is ostensibly designed to best meet the needs of the area. Therefore, the comptroller declines to repeal the proposed rule as recommended. However, the comptroller agrees with the suggestion that the rule should be clarified to also allow the comptroller to consider community support in addition to active community participation as a criterion. The comptroller will adopt the proposed rule with changes based on this comment.

AT&T commented that under §16.40(b)(8) it is unclear how affordability will be measured and how such a measurement will impact a provider's application. They further noted that the proposed rule provides no affordability standards upon which such a measurement would be based and cautioned that providing a better preference score for "affordability" based on lower rates may be considered, for all practical purposes, a form of rate regulation, which is not permitted on broadband services. The comptroller disagrees with the comment that providing a preference based on affordability is a form of rate regulation. As noted previously, participation in the grant program is entirely voluntary and setting a condition for receipt of a grant is not rate regulation. The comptroller notes that §16.40 merely provides notice of the factors the comptroller may include and provide a preference for in each applicable notice of funds availability. As such, the rule is not intended to either establish affordability standards or provide a definitive measure of how affordability will be measured. Instead, as contemplated by statute, those considerations, if applicable, will be left for each state-issued NOFA. Accordingly, the comptroller does not believe a change to the proposed rule is needed based on this comment.

AT&T raised similar concerns regarding affordability with respect to §16.40(b)(9) noting that preferences relating to consumer pricing could become a form of rate regulation. TCA also commented that care must be taken to avoid rules that morph preferences into price regulation. While acknowledging that evaluating affordability is an acceptable objective for the program, TCA reiterated its comments regarding Government Code, §490I.0103, which prohibits the comptroller from regulating broadband service providers. TCA further expounded on this theme, referencing Utilities Code, §52.002(d), which prohibits the state from directly or indirectly regulating the rates charged for any broadband-enabled service. TCA noted that courts have held in related contexts that statutory prohibitions against rate regulation apply where a state either (1) specifies the rates that must be charged for specific levels of service or (2) freezes prices or restricts providers from adjusting rates in certain ways. Consequently, TCA argued that adoption of any specific price point or setting any sort of price cap would amount to impermissible rate regulation under both analyses. Further, TCA recommended that the comptroller align any evaluation of affordability with the Affordable Connectivity Program, a federal subsidy program aimed to assist eligible households afford internet service, and to permit applicants to specify their own framework to meet affordability requirements. The comptroller disagrees with these comments to the extent that they suggest that the comptroller may not by rule establish a preference that considers affordability because doing so is, in effect, indirect rate regulation. The comptroller notes that the proposed rule neither sets specific rates that Cont'd...