The Comptroller of Public Accounts adopts amendments to §16.30, concerning definitions, §16.31, concerning notice of funds availability, §16.35, concerning program eligibility requirements, §16.36, concerning application process generally, §16.37, concerning overlapping applications or project areas, §16.38, concerning special rule for overlapping project areas in noncommercial applications, §16.40, concerning evaluation criteria, §16.41, concerning application protest process, and §16.42, concerning awards; grant agreement. Sections 16.30, 16.36, 16.37, 16.40 and 16.41 are adopted with changes to the proposed text as published in the October 13, 2023, issue of the Texas Register (48 TexReg 5959) and will be republished. Sections 16.31, 16.35, 16.38 and 16.42 are adopted without changes to the proposed text as published in the October 13, 2023, issue of the Texas Register (48 TexReg 5959) and will not be republished.

The comptroller renames Subchapter B as Texas Broadband Development Office, reorganizes it into two divisions, and moves all sections located in Subchapter B to Division 2 (Broadband Development Program).

The amendments to §16.30 add new definitions.

The amendments to §16.31 expand the methods by which the office may publish the required notice of funds availability.

The amendments to §16.35 make conforming changes required by Senate Bill 1238, 88th Legislature, R.S., 2023, by deleting the prohibition against making an award to a broadband service provider that does not report certain information to the office and renumbering accordingly.

The amendments to §16.36 provide the office with greater discretion to reject an application that does not comply with applicable program requirements on its face. The amendments also update the reasons for which an applicant may amend and resubmit an application after a protest has been upheld. The amendments also make conforming changes required by Senate Bill 1238, 88th Legislature, R.S., 2023, by prohibiting a broadband service provider from submitting an application protest if the provider has not provided certain information requested by the office.

The amendments to §16.37 revise and streamline the process by which overlapping project locations are resolved by removing the requirement allowing broadband service providers to collaboratively resolve project area overlaps and providing for the office to independently resolve the overlapping areas to avoid duplication. The amendments make changes to how the remaining project area is calculated after overlapping project areas are resolved by the office. The amendments also require the office to provide notice to applicants affected by the determination of the office.

The amendments to §16.38 revise the process by which overlapping project locations are resolved between applications from noncommercial broadband service providers and applications from commercial broadband service providers.

The amendments to §16.40 provide for a new process through which the office shall establish eligibility and award criteria and requires the office to provide notice of the criteria in a notice of funds availability. The amendments expand the mandatory criteria that the office must consider when establishing the eligibility and award criteria, including establishing a preference for fiber optic projects while also allowing the office to consider non-fiber optic projects for high-cost areas.

The amendments to §16.41 update the application protest process by requiring the office to publish on its website the criteria and requirements for submitting a protest. The amendments clarify the basis for which a protest may be submitted and eliminate specific documentation requirements set out by rule. The amendments provide additional notice requirements for applicants affected by a protest determination and make changes to when an affected applicant may submit an amended application if a protest is upheld.

The amendments to §16.42 clarify that the restriction on the use of grant funds only applies to grants for the deployment of broadband infrastructure.

The comptroller received comments from the following organizations, interest groups, and individuals: AT&T; Cherokee County Electric Cooperative Association ("CCECA"); City of Austin ("Austin"); GVEC; Harris County Office of Broadband ("Harris County"); The Honorable Trent Ashby; National Rural Telecommunications Cooperative ("NRTC"); Nextlink Internet; Tarana Wireless; Tekwav; Texas Cable Association ("TCA"); Texas Electric Cooperatives ("TEC"); Verizon; Texas Telephone Association ("TTA") and Wireless Internet Service Providers Association ("WISPA").

The comptroller received general comments in support of the proposed rules from organizations including Nextlink Internet, TCA, and Tarana Wireless. Nextlink Internet expressed appreciation that the proposed rules more closely aligned with the Broadband Equity, Access, and Deployment (BEAD) Program requirements, while enhancing program flexibility and maintaining technology neutrality. In addition to more specific comments, the comptroller also received general comments from TCA expressing support of the comptroller moving toward a location-based funding approach through the proposed rules. Tarana Wireless also commented favorably on the proposed rules noting that alignment with Senate Bill 1238 was a positive stride toward bridging the digital divide. Tarana Wireless specifically expressed its support for the increased discretion afforded the BDO in the application overlap process would strengthen the ability to prevent duplication. Tarana Wireless also supported the consideration of non-fiber technologies as an inclusive and pragmatic strategy that would guarantee the selection of the most suitable tools to address the broadband needs of Texans.

The comptroller received comments from CCECA that expressed concerns but were not directly focused at any specific proposed rule. CCECA raised its continuing concern with the lack of state funding being made available to providers bringing broadband to rural areas because those areas are already "locked up" due to existing funding commitments from federal programs like the Rural Digital Opportunity Fund. CCECA stated that it was notably concerned about the apparent strategy employed by some broadband providers to "lock up" areas through the use of existing federal commitments without any true plan on the part of those providers to expand service to those areas and requested that the comptroller provide more flexibility to allow state funding in those areas. While the comptroller appreciates these concerns, the statute does not allow the comptroller to award grant funding to locations that are subject to an existing federal commitment to deploy qualifying broadband service. The comptroller therefore lacks the authority to amend the proposed rules as suggested by these comments.

The comptroller received many comments regarding the proposed definitions contained in §16.30. TTA expressed its support for the proposed definition for "middle mile infrastructure" noting that the proposed definition was consistent with BEAD and excludes the provision of service to end-users. TTA also supported the proposed changes to the definition of "project area" because it focuses on individual locations and allows applicants to define their proposed project areas.

In line with its comments regarding §16.36(d), TCA requested the comptroller to change the definition of "application protest period" contained in §16.30(2) to extend the period to 45 days. The comptroller disagrees with this comment because the current 30-day period provides sufficient time to evaluate whether an application may be subject to protest. The comptroller therefore declines to make a change to the proposed definition based on this comment.

TTA provided a comment regarding the definition for "broadband serviceable location" contained in §16.30(5), remarking that the term "broadband internet service" as used in that section is not in the BDO's enabling statute and is already included in the definition of "broadband service." Therefore, TTA recommended removing the word "internet" as unnecessary. The comptroller agrees with this comment and will adopt the proposed definition with changes.

TTA also commented on §16.30(6) which outlines the definition of a "census tract" and noted that the term would no longer be used in the subchapter with the repeal of §16.33 and §16.34. Consequently, TTA recommended deletion of the term. The comptroller agrees with this comment and will delete the definition.

AT&T and TCA requested clarification regarding the meaning of "designated area" in renumbered §16.30(9) given the repeal and replacement of §16.33 in separate rulemakings and suggested revision of the definition. The comptroller agrees with these comments and adopts the proposed definition with changes.

TTA commented on the definition of "grant funds" contained in renumbered §16.30(10) noting that the concept of a designated area no longer applied in this context with enactment of Senate Bill 1238. The comptroller agrees with this comment and adopts the proposed rule with changes.

TTA urged the comptroller to expand the definition of a "served location" in §16.30(20) to include not only existing federal commitments, but also state and local commitments arguing that this proposed expansion would be consistent with BEAD guidelines. The comptroller disagrees with this comment because the comptroller is statutorily required to classify each broadband serviceable location based on access to reliable broadband service. With the exception of existing federal commitments to deploy broadband service which are statutorily prohibited from receiving program funds, the comptroller does not believe it has the authority to stretch the plain and ordinary meaning of "access" to include commitments of future availability of broadband service when determining whether a location is served or not. Therefore, the comptroller declines to amend the proposed definition based on this comment. TTA similarly urged the comptroller to replace the term "reliable broadband service" as used in that section with a newly defined term they suggested for "qualifying broadband service" that would incorporate specific speed and latency requirements. The comptroller disagrees with this comment. While the comptroller agrees with adding a definition for the term "qualifying broadband service" is warranted for the sake of clarity, adopting specific speed and latency requirements would unnecessarily restrict the flexibility of the BDO to prescribe differing thresholds based on funding source or changing needs over time. Therefore, the comptroller declines to amend the proposed definition based on this comment.

In addition to commenting on the proposed definitions, some commenters advocated for the inclusion of new definitions. Many commenters, including Representative Trent Ashby, AT&T, Austin, GVEC, Harris County, TCA, TEC, and TTA, remarked on the need for the comptroller to define what constitutes "reliable broadband service." Representative Ashby provided comments urging the comptroller to adhere to the legislative purpose of Senate Bill 1238 by following federal guidance with respect to broadband reliability and enhanced speed requirements. Likewise, GVEC, TEC and TTA requested the comptroller to harmonize its definition with federal guidelines. TEC went further, urging the comptroller to specifically exclude both satellite and unlicensed fixed spectrum from the definition of reliable broadband service. AT&T sought confirmation that the comptroller's proposed definition would be the same as that term is used in the BEAD Program's Notice of Funding Opportunity (NOFO). Austin and Harris County urged the comptroller to provide a specific definition replete with technical specifications that include broadband download/upload speeds, consistency, quality of service and latency requirements. The comptroller agrees with commenters urging the comptroller to adopt a definition for reliable broadband service that more closely harmonizes state law with federal guidance. The comptroller believes that adopting a definition for reliable broadband service that is the same as that found in the BEAD Program's NOFO is needed to fulfill and comply with the legislative purpose of Senate Bill 1238. Therefore, the comptroller adopts the proposed rule with changes to reflect the addition of a definition for "reliable broadband service."

TEC also requested the comptroller to consider inclusion of a new definition for the term "broadband." While noting that a statutory definition exists for the term, TEC opined that a definition should be included in the proposed rules. The comptroller disagrees with this comment because the proposed rules already include the statutory definition of "broadband service."

GVEC noted that the proposed rules use the term "qualifying broadband service" multiple times and suggested that the comptroller adopt a definition for the term. GVEC pointed out that existing federal programs have differing thresholds for delivering internet service and urged the comptroller to adopt a definition that is closely aligned with the higher threshold used by the federal BEAD Program. NRTC and TTA similarly suggested the utility of the comptroller adopting a definition for "qualifying broadband service." TTA offered a proposed definition that incorporates both the speed and latency requirements and the reliability standards contained in the BEAD NOFO. The comptroller appreciates the concern raised by these comments and the need for additional clarity; however, because the threshold for what constitutes qualified broadband service may be dependent on the funding source and may change over time, the comptroller does not believe adopting a defined threshold by rule is the right approach. Instead, to maintain flexibility, the comptroller believes that this threshold should be defined in each applicable Notice of Funds Availability (NOFA) issued by the office. Therefore, the comptroller will amend the proposed rule to add a definition for "qualifying broadband service" that permits the BDO to set the applicable standard as part of the criteria contained in each state-issued NOFA.

TTA also advocated for inclusion of a newly defined term "planned service commitment" for use in the context of map challenges. TTA argued that new term would allow a challenge based not only on the existence of a federal, state, or local commitment to deploy broadband service, but also on a provider's existing plans to provide reliable broadband service to the location within a reasonable time and without government grant funding. TTA further remarked that given the significant number of locations in Texas that do not have access to broadband and limited funding, that planned service commitments as defined by a newly adopted definition would prevent wasteful, duplicative spending by avoiding unnecessary funding of a location when that location would already be served using private investment. While the comptroller agrees with the goal of maximizing the expansion of broadband service and avoiding duplicative spending, the comptroller does not believe it has the authority to consider planned service because it is statutorily required to classify broadband serviceable locations based on their current access to reliable broadband service. Therefore, the comptroller declines to amend the proposed rule based on these comments.

The comptroller received several comments from TCA and TTA regarding §16.31 which provides notice requirements. TTA proposed the office make the publication of a NOFA on its website mandatory as a fundamental part of the process for consistent, fair notice to all applicants. While the comptroller agrees that consistent notice is a fundamental part of the application process, the comptroller does not believe that changing the rule to make publication on its website is necessary. The proposed rule already requires the comptroller to provide notice to interested applicants by publication in either the Texas Register or the comptroller's Electronic State Business Daily search website. Both TCA and TTA suggested that in addition to the publication requirement, the comptroller expand the methods of providing notice by requiring the BDO to provide notice through an email distribution list for interested parties. The comptroller disagrees with these comments because the comptroller's Electronic State Business Daily search website already includes the requested functionality that would allow interested parties to receive email notification of posted funding opportunities.

Both TCA and TTA also urged the comptroller to amend §16.31 to require the BDO to permit interested parties to submit comments on proposed NOFAs before they are finalized. TCA argued that many NOFA provisions are essentially rules with the same impact and effect as administrative rulemaking and therefore deserve the same public comment process. TCA opined that gathering input from interested parties would yield NOFAs that are clearer, fairer and more effective. Therefore, TCA recommended making draft NOFAs available 45-days before official issuance and allowing for informal comment for 30 days. TTA proposed a similar timeline for providing public comment, noting that the process would allow any errors to be corrected. The comptroller disagrees with comments that equate an invitation to voluntarily enter into a contract or grant agreement with rulemaking. The comptroller believes that permitting applicants to shape the grant requirements prior to issuance could prevent open and fair competition. The comptroller notes that the question-and-answer process subsequent to issuance of a NOFA already allows the BDO to provide clarification and correct any errors identified. Therefore, the comptroller declines to make a change to the proposed rule based on these comments.

The comptroller received many comments regarding the application process found in §16.36. TCA submitted a comment requesting the comptroller to consider extending the application publication and protest period found in §16.36(d) to 45 days due to the number and complexity of projects that may be involved. TCA noted that an extended timeframe would allow for more thorough and accurate protests to be made and result in avoidance of frivolous protests. The comptroller disagrees with this comment because the current proposed rules narrow the ground on which a protest may be submitted and ultimately simplify the evaluation process. Therefore, the comptroller believes the current 30-day period provides sufficient time to evaluate whether an application may be subject to protest. TTA also commented on §16.36(d), requesting that the comptroller include broadband serviceable locations among the information the BDO is required to publish on its website. The comptroller notes that its current practice is to publish summary information regarding application protests on its website together with a link that allows interested parties to review the contents of an application protest. Therefore, the comptroller does not believe a Cont'd...