How the 2017 Legislative Session is Going to Affect You, TxDOT, and the Courts
We’ve previously reported on important litigation involving the Texas Department of Transportation (TxDOT), including the August 26, 2016 decision by the Texas Court of Appeals in Auspro vs TxDOT, which held that the Texas Highway Beautification Act (HBA) is unconstitutional under the Free Speech Clause of the First Amendment. TxDOT has appealed Auspro by filing a petition for review to the Texas Supreme Court, which has requested briefing by the parties on whether to accept jurisdiction and entertain the case. The high Court is expected to either grant the petition and request briefing on the merits, or deny the petition and leave the Court of Appeals’ opinion standing by the end of the summer.
Another area where TxDOT has been heavily engaged in litigation is over alleged violations of sign height regulations. It is estimated that TxDOT has cancelled approximately 200 permits for such violations, resulting in many administrative appeals and cases pending in the State Office of Administrative Hearings (SOAH).
The New HBA: We can tell you why 85 might be the new 42.5
The 85th Legislature passed legislation which Governor Abbott has now signed into law that address these two areas of TxDOT litigation. First, SB2006 eliminates the constitutionally suspect method of reading the content displayed on the sign to distinguish between regulated “off-premise signs” and exempt “on-premise” signs; instead, the new law reclassifies signs as regulated “commercial signs” and exempt “non-commercial signs” based on whether a fee is paid for displaying a message on the sign, regardless of what that message might be. Second, SB312, the TxDOT sunset reauthorization bill, contains a provision that permits signs that existed prior to March 1, 2017, to be up to 85’ in height (rather than the current height limit of of 42.5’). We anticipate that as a result, TxDOT will likely (1) dismiss the pending SOAH height violation cases where the only alleged permit violation is excessive height up to 85’; (2) rescind any cancellations of the permits: and (3) reinstate those cancelled permits. For any permit violations alleging heights for signs in excess of 85’, as well as those alleging any other permit violations as grounds for cancellation (such as adding faces or lights, changing materials or configuration, or missing permit plates), the status quo will continue to be maintained until the Texas Supreme Court resolves the issues implicating the constitutionality of the HBA in Auspro.
The revised HBA also includes “enabling language,” which authorizes the Texas Transportation Commission to enact administrative rules on the size, height, spacing, lighting, and other limitations on billboards consistent with these new laws passed by the Legislature. The administrative rule making process is contained in the Texas Administrative Procedures Act, which requires TxDOT to publish its proposed rules in the Texas Register, file them with the Texas Secretary of State, provide at least 30 days notice of its intent to adopt new rules, afford interested parties the opportunity to submit written comments, hold public hearings, and provide written reasons for adopting the rules and for overruling comments urged against adoption. This process typically lasts several months.
Changing the Rules of the Game: Make sure your voice is heard before the TxDOT rules are changed
TxDOT has commenced the process for amending its administrative rules, including to address the new provisions of SB2006 and SB312. The Texas Transportation Commission’s next meeting, at which it may for the first time consider these rules, will be held in the Greer Building, 125 E. 11th, Austin TX 78701, on July 27 at 9AM.
TxDOT’s draft of the proposed new and amended rules will hopefully be made available to the public before the July 27 meeting. TxDOT has also indicated its intention to schedule a stockholders’ meeting in advance of the July 27 meeting with the Transportation Commission, in order to elicit comments and questions from the outdoor advertising industry and others. As part of the rule making process, TxDOT will entertain written comments and proposals from the industry and others, formally commencing on September 11, 2017. Those new administrative rules will at the minimum include the subjects of SB2006 and SB312, namely reclassifying off-premise and on-premise signs as commercial and non-commercial signs, and addressing the height of grandfathered and perhaps new and relocated billboards. The process also affords the industry the opportunity to advocate for more favorable regulations, such as on the compensation and relocation of billboards displaced by highway improvements, access from the right of way for billboard maintenance, and vegetation control.
We are already working for clients to dismiss pending height violations, and plan to actively participate in the TxDOT rule making process on behalf of our clients, which will likely define the regulatory and administrative landscape in which the industry operates for years to come. Let us know how R&F can help you.
Stay tuned to The Bulletin for more information and developments, and feel free to contact us with any questions.
June 26, 2017
The 2017 Texas Legislative Session
Texas HBA Reform
SB 2006, authored by Senator Kirk Watson, has passed the Senate and House, and it is expected to be signed into law by the Governor and take effect immediately upon his signature. This bill is in response to the unanimous Third Court of Appeals (Austin) decision in TxDOT vs. Auspro decided on August 26, 2016. In Auspro, the Court relied heavily on the US Supreme Court’s decision in Reed vs. Town of Gilbert, in holding that Subchapters B and C of the Texas HBA, where most of billboard regulations and jurisdictional authority of TxDOT are found, are “unconstitutional content-based restrictions on speech.” In an effort to cure the constitutional criticisms in Auspro, SB 2006 eliminates the traditional means for distinguishing between regulated off-premise signs and exempt on-premise signs by reading the message displayed on the sign, and then determining whether the goods or services advertised on the sign are located on or off of the premises. Instead, the bill makes the distinction based on whether a fee is paid for the display of goods or services on the sign. If so, it is a regulated “commercial sign;” if not, it is an exempt “non-commercial sign.”
The pertinent language of the bill is as follows: “‘Commercial sign’ means a sign that is:
(A)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
(B) located on property owned or leased for the primary purpose of displaying a sign.”
SB 2006 operates only prospectively, meaning the actions of TxDOT and regulations under the HBA prior to the effective date of the new Act remain subject to the holdings in the Auspro case. However, TxDOT has filed a petition for review with the Texas Supreme Court, which is considering whether to accept the case and rule on its merits. In the meantime, TxDOT is taking the position while its appeals are pending that it is “business as usual,” by continuing to require billboard operators to honor all of the permit, license, and regulatory requirements imposed by TxDOT.
Sign Height
The second major bill passed by the Senate and House is SB 312, the TxDOT Sunset Bill authored by Senator Robert Nichols. The bill primarily addresses the myriad of TxDOT’s administrative and procedural requirements unrelated to outdoor advertising. However, it also amends Sections 391.038 and 391.039 of the HBA by effectively grandfathering signs existing on 3/1/17 at a height of 85’. The pertinent language is found in Section 43, and provides as follows:
“SIGN HEIGHT. (a) This section applies only to a sign existing on March 1, 2017, that was erected before that date.
(b) A sign described in Subsection (a) may not be higher than 85 feet, excluding a cutout that extends above the rectangular border of the sign, measured:
(1) from the grade level of the centerline of the main-traveled way, not including a frontage road of a controlled access highway, closest to the sign at a point perpendicular to the sign location; or
(2) if the main-traveled way is below grade, from the base of the sign structure.
(c) A person may rebuild a sign described by Subsection (a) 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, and at a height that does not exceed the height of the sign on that date.”
SB 312, unlike SB 2006, does not operate prospectively, meaning that signs built in the future must comply with the current 42.5’ height limit imposed by Section 21.189 of TxDOT’s regulations. Importantly, however, it also follows under the bill that any permit violations or cancellations for signs existing on 3/1/17 should be dismissed and reinstated, and that those grandfathered signs can continue to be maintained at their current heights up to 85’.
Other Legislation Affecting Outdoor Industry
Several other measures were advocated by the outdoor advertising industry but never advanced in the Legislature, including just compensation for signs displaced by highway improvements, access from the right of way for sign maintenance, vegetation control to enhance sign visibility, and State preemption of municipal authority and regulation. On the other hand, the industry avoided the type of unfavorable legislation often sought by its opponents, such as the expansion of the thoroughfares across the State where new billboard erection is prohibited in Section 391.252 of the HBA. In sum, for what many consider to be one of the most contentious legislative sessions in recent history, the 85th Legislative Session was relatively uneventful for the outdoor advertising industry.
June 1, 2017
Auspro & Legislative Update – March update
We’ve reported previously about the August 26, 2016 decision by the Texas Court of Appeals in State of Auspro vs TxDOT, essentially holding the Texas Highway Beautification Act unconstitutional under the First Amendment. As expected, the State has continued appeals of this opinion, first by moving for a rehearing in the Court of Appeals, which was denied on December 8, 2016. On February 22, 2017, the State then filed a petition for review to the Texas Supreme Court. The Texas Supreme Court is expected to rule over the next few months as to whether it will accept jurisdiction and entertain the appeal, and if it does so, a decision on the merits of the case might be issued sometime in 2018. In the meantime, as we’ve also indicated previously, TxDOT continues to operate “business as usual,” contending that during the appellate process it still has the authority to issue, cancel, hear appeals, and prosecute enforcement actions for permits and licenses.
As we also expected, the Texas Legislature has filed proposed legislation designed to cure the criticisms in Auspro and render the Texas HBA constitutional. Specifically, on March 9 , 2017, Senator Watson filed Senate Bill 2006 and Representative Morrison filed House Bill 3855. Both bills contain identical provisions purporting to define regulated off-premise signs and distinguish them from exempt on-premise signs in a content neutral manner. More specifically, the term “commercial sign” replaces “off-premise sign,” which is now defined as “a sign that is 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.” These bills will now proceed through the legislative process, which will conclude this May 2017.
The Auspro case, as well as the related appellate and legislative processes it has spawned, are complex and critical to the outdoor advertising industry. If you have any questions, want more information, or need any assistance in any of these areas, please let us know.
March 21, 2017
Eminent Domain
As the population of the State of Texas grows, so do its roadways. Billboards are most often located alongside heavily trafficked highways, so its no surprise that signs are often caught in the crosshairs when the road has to widened.
The Supreme Court and courts of appeals of the State have recently taken up issues that significantly impact the amount of just compensation that a sign owner may receive when his sign must be removed as part of a State construction project. In addition to compensation owed for the taking of a sign, the governmental entity is also required to pay the sign owner who loses rights under a lease, easement or other interest in the land.
Sign owners who choose to relocate their signs need to know their options when the State comes knocking. TxDOT recently issued policy statements that alter the relocation assistance benefits that a sign owner may receive when choosing to relocate rather than seek just compensation in eminent domain. A sign owner who takes this option may still recoup the value in his lease, easement, or interest in the land, but must act within the Department’s timelines in order to protect his rights.
March 21, 2017
Permit Issues
In the last several months, many of our clients have come to us with permitting issues involving TxDOT. Our observation is that TxDOT is taking longer than usual to process new permit applications, as well as renewals, transfers, and amendments. At the same time, TxDOT appears to be ramping up enforcement efforts and issuing a large amount of permit cancellation and violation notices for questionable and minor infractions.
In light of TxDOT’s current handling of permit-related matters, it’s important to keep in mind the rules that keep both the regulator and sign owner in check:
Permit Applications: The Department must make a decision on an application within sixty days. If it cannot reach a decision, then it must notify the applicant of the reason for the delay and estimated date for when a decision will be made. Permit applications are considered in the order in which they are submitted. If an application is denied, the applicant has forty-five days to appeal the decision.
Permit Enforcement Actions: A Notice of Cancellation must be appealed within forty-five days. Recently, the Department has taken the position that certain actions allowing for TxDOT’s cancellation of a permit (for example, making an unauthorized substantial change to a non-conforming sign) result in a daily fine that starts accruing on the date the cancellation notice is issued.
Solution: Whether it’s a delay in a decision on an application, or an irritating cancellation notice, its important to (1) act quickly and diligently and (2) keep a written record of your efforts. TxDOT’s regulations are often time sensitive and the quicker you act, the quicker you’re likely to get a result. More importantly, quick action can keep costs and fines to a minimum. In addition to staying on top of permitting issues, make sure that you have a written record of your appeals and communications with TxDOT. We’ve successfully negotiated quick and inexpensive resolutions of permit disputes with TxDOT on behalf of many clients in recent months. Let us know if we can help you.
March 21, 2017