Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF TRANSPORTATION

OF THE STATE OF MONTANA

In the matter of the adoption of New Rules I and II, the amendment of ARM 18.7.203, 18.7.204, and 18.7.206, and the repeal of 18.7.205 and 18.7.221 pertaining to Utility Right-of-Way Occupancy

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION, AMENDMENT, AND REPEAL

TO: All Concerned Persons

1. On June 22, 2022, at 9:30 a.m., the Department of Transportation will hold a public hearing via remote conferencing to consider the proposed adoption, amendment, and repeal of the above-stated rules. Interested parties may access the remote conferencing platform in the following way:

Registration with Zoom may be made at the following link:

https://mt-gov.zoom.us/meeting/register/tZclde-oqTkqH9Mp3O0lViFGtG4BTnH4im7k

2. The Department of Transportation will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Transportation no later than 5:00 p.m. on June 17, 2022, to advise us of the nature of the accommodation that you need. Please contact Steve Giard, Utility Section Manager, Department of Transportation, P.O. Box 201001, Helena, Montana, 59620-1001; telephone (406) 444-6080; fax (406) 444-7254; TTY Service (800) 335-7592 or through the Montana Relay Service at 711; or e-mail sgiard@mt.gov.

3. The rules as proposed to be adopted provide as follows:

NEW RULE I ELIGIBLE PROJECTS FOR LONGITUDINAL INTERSTATE USE (1) The department may enter a right-of-way use agreement for longitudinal occupancy of right-of-way along interstate highways for eligible project facilities which consist of a pipeline or fiber optic or other communications-type cables and associated infrastructure.

(2) An eligible project facility owner applicant may apply for a right-of-way use agreement through the department's Utility Permitting Administration System (UPAS) through the department's website at www.mdt.mt.gov or mdtupas.com. The right-of-way use agreement conditions, the department's administrative rules ARM 18.7.201 through 18.7.231, and the department's right-of-way utilities manual set forth the procedures and conditions for all eligible project facility installations and maintenance.

(3) An eligible project facility owner applicant must provide evidence that:

(a) construction and completion will result in a significant investment, a documented positive significant fiscal impact, or both, to the Montana economy within the first year of operation;

(b) the eligible facility is in the public interest; and

(4) The department's application review process shall be conducted in the order of receipt of applications and shall include consideration of:

(a) dig-once construction option to minimize construction disruptions and establish multiduct telecommunication systems for future use by multiple telecommunication companies and state and local governments;

(b) maximum occupancy of facilities and remaining availability of interstate right-of-way in the appropriate eligible facility corridor at the proposed project location;

(d) multiduct shared resource agreements which benefit the state or local governments;

(e) travelling public's safety and convenience; and

(f) sufficient maintenance area for proposed eligible facility location.

(5) The department shall approve or deny the application within 90 days of final approval by FHWA.

(6) The applicant must submit an application through UPAS, pay the $100 non-refundable electronic convenience fee, receive preliminary FHWA approval, negotiate and execute the right-of-way use agreement (including determination of the appropriate fair market value payment amount), receive final FHWA approval and pay the fair market value of the portion of the right-of-way for the eligible project facility's location in the amount stated in the right-of-way use agreement prior to commencement of any construction work within the interstate right-of-way.

(7) Fair market value shall be determined as follows:

(a) The department will distinguish the various land uses and values for the entire interstate highway system by designating multiple segments as "rural" or "urban" zones and publish a map depicting the zones and associated values which may be updated as the department deems necessary.

(b) The unit of measure for fiber optic or other communications-type cable eligible projects on the interstate highways is a 6-foot-wide tract one mile long, or 31,680 square feet (6 feet x 5,280 feet/mile) per occupied conduit. The unit of measurement for pipeline eligible projects on the interstate highways is based on a 12-foot-wide tract one mile long, or 63,360 square feet (12 feet x 5,280 feet/mile) per pipeline.

(c) Unit value is the product of the unit square footage, the zone value per square foot, and an administratively determined lease rate of 10% annually. The department sets a 30-year term with the option to pay in a lump sum, standard incremental payments as determined by the department, or in-kind use deductions as negotiated in the right-of-way use agreement. Lump sum payments will be calculated using a net present value formula.

(d) The department shall deposit the revenues derived from the right-of-way use agreement in the state special revenue highway restricted account established in 15-70-126, MCA.

(8) Eligible facility corridors consisting of 6-foot-wide fiber optic or other communications-type cable corridors from edge of right-of-way toward centerline, and separate 12-foot-wide pipeline corridors from edge of fiber optic corridor toward centerline shall be established on interstate right-of-way. The department may require an eligible facility applicant to install a negotiated number of conduits providing increased capacity for future use by competitors or state or local governments under the following conditions:

(a) No less than four conduits are required. The applicant may provide justification for additional conduits to accommodate increased capacity.

(b) Subsequent conduit installation by any eligible facility is prohibited until all existing conduit has been fully occupied.

(c) Access points or vaults must be provided outside of highway access control at every metropolitan and rural community, and at each interchange for the length of the proposed eligible facility.

(d) The multiduct eligible facility shall be the eligible facility owner's property throughout the term of the right-of-way use agreement under the following conditions:

(i) A separate fair market value payment to the department is required for each occupied innerduct containing fiber optic cable which an eligible facility owner installs.

(ii) The eligible facility owner agrees to sell extra conduits on a competitively neutral and non-discriminatory basis to another eligible facility. A purchaser of extra conduit becomes the owner of the purchased portion and is solely responsible for future operation and maintenance of the purchased conduit.

(iii) The eligible facility owner's sale price must be based on recoupment of the installation costs only, calculated as the cost of the original installation prorated by the number of conduits installed. The eligible facility owner must retain adequate records of installation costs to allow the department to verify installation costs and review and approve the sale price prior to conclusion of the sale transaction.

(iv) A sale must grant an indefeasible right of use to another eligible facility, which right shall remain unless the installing eligible facility owner's right-of-way use agreement is terminated.

(v) Subsequent occupants installing fiber optic cable in an empty innerduct or conduit of the multiduct system must pay the full fair market value to the department as per payment options provided in this rule, in compliance with the department's then-current fair market value calculation, prior to installation.

(vi) There is no charge for empty innerduct, or conduit installed vertically within the same trench line along the interstate right-of-way provided, however, each separate trench line shall require a right-of-way use agreement.

(vii) All eligible facility owners, whether the initial installer or a subsequent conduit purchaser, must notify the department in writing prior to any sale of its eligible facility. After a sale, the purchaser is required to act as the single point of contact for all operations. The purchaser is required to negotiate a new right-of-way use agreement with the department including appropriate fair market value payment or in-kind services agreement.

(9) Facilities installed under a right-of-way use agreement are not eligible under 60-4-401 through 60-4-403, MCA, for payment of relocation costs for department highway construction projects. The eligible facility owner agrees to waive all future rights to be reimbursed for relocation costs incurred should maintenance or construction of the interstate require relocation of the eligible facility. Should relocation of the eligible facility be required, the department makes no assurances nor assumes any liability to the eligible facility owner regarding whether the eligible facility will again be allowed to occupy the interstate right-of-way.

(10) Facilities installed under a right-of-way use agreement must comply with ARM 18.7.222 through 18.7.231 for general utility installation and maintenance requirements.

AUTH: 60-2-201, 60-3-101, 60-4-601, MCA

IMP: 60-2-201, 60-4-601, 60-5-101, 60-5-104, MCA

REASON: The 2021 Legislature enacted Chapter 439, Laws of 2021 (Senate Bill 392), codified at 60-4-601, MCA, An Act Providing for Grant of Right-of-Way by the Montana Department of Transportation for Certain Eligible Projects Along Interstate Highways; Establishing Criteria; Setting Timelines for Department Review; Requiring an Applicant to Pay the Department Certain Fees; Granting the Department Rulemaking Authority; and Providing an Immediate Effective Date. The bill became effective May 10, 2021. Proposed New Rule I is necessary to begin accommodation of eligible project pipeline or fiber optic or other communications-type cables and associated infrastructure within full access control (interstate) highway right-of-way which has not historically been allowed. MDT has historically considered the primary purpose of interstate highways to be movement of people and goods by vehicles, while accommodation of public or non-public utility facilities is considered a secondary benefit, which is subordinate to vehicular use. MDT seeks to keep the interstates operating efficiently without constant interruptions for facility utility work and to minimize risks imposed by facility lines in the roadway, which must now be done simultaneously with accommodation of eligible projects under SB 392.

Proposed New Rule I is necessary to provide information on the application process to be used for eligible project facilities and the payment of an application fee and fair market value right-of-way use agreement lease payments for use of interstate-controlled access right-of-way. The department projects the proposed initial fees and lease valuation payments for SFY 2023 will impact approximately one applicant, assuming 75 miles in the Billings District and 75 miles in the Butte District, resulting in a projected revenue increase of approximately $8,752,110 as the 20% initial payment.

Proposed New Rule I is also necessary to implement SB 392, and to clarify necessary requirements for establishment of eligible project corridors, dig-once construction to minimize construction disruptions, and use of multiduct telecommunication systems for future use by multiple telecommunication companies and state and local governments.

Proposed New Rule I is also necessary to clarify requirements for subsequent sale of broadband extra conduit on a competitively neutral basis for a price reasonably calculated to recoup installation costs. The department intends the proposed rule language on competitively neutral sale and installation recoupment pricing to encourage broadband fiber installation for greater access in Montana. The proposed rule language is intended to allow both large and small broadband fiber companies equal access to previously unavailable interstate right-of-way.

Proposed New Rule I is also necessary to establish that eligible project facilities installed in interstate right-of-way under SB 392 right-of-way use agreements are not eligible for relocation benefits should future highway construction projects require relocation of the facility.

NEW RULE II BROADBAND - FIBER OPTIC - TELECOMMUNICATIONS FACILITIES IN NON-INTERSTATE HIGHWAYS (1) The department may issue utility encroachment permits with applicable terms and conditions on a competitively neutral and nondiscriminatory basis for use of non-interstate federal aid highway system rights-of-way to telecommunications, fiber optic, and broadband facility owners for the purpose of installation of telecommunications equipment and facilities within state highway rights-of-way.

(2) Any broadband facilities placed on the non-interstate federal aid system highway right-of-way shall be placed in accordance with existing laws and the standards of the department.

(3) All broadband facilities, after having been installed or erected, shall at all times be subject to inspection. The department reserves the right to require future facility changes which may be necessary for highway construction or reconstruction projects, to ensure the safety of traffic on the highway. The cost of making such future changes, additions, repairs, and relocations shall be the sole responsibility of the facility owner.

(4) If the department has a highway improvement project which causes an interruption in service, any interruption in service as a result of the project is the sole responsibility of the facility owner. If the facility owner fails to relocate the facility within the deadline established by the department, any damage to the facility as part of construction of the highway project will be solely at the facility owner's expense.

(5) The proposed facilities, their operation, and their maintenance shall not interfere with the operation or maintenance of the facilities owned by other persons, firms, corporations, or government entities previously issued a utility encroachment permit or occupancy agreement. The proposed facilities shall not be dangerous to persons or property using or occupying the non-interstate highway or using facilities constructed under previously granted utility permits. It is the duty of the applicant to determine the existence and location of all facilities within the non-interstate highway right-of-way.

(6) Installations within the non-interstate highway right-of-way shall be established in accordance with applicable provisions contained in the following:

(a) AASHTO Guide for Accommodating Utilities within Highway Right-of-Way;

(b) Code of Federal Regulations, 23 CFR 645;

(d) 1996 Federal Telecommunications Act.

(7) Those facilities not included in (6) shall be established in accordance with accepted practice. Where standards of the department exceed those of the above-cited codes, the standards of the department shall apply. The department reserves the right to modify its standards, as may be required, if conditions warrant.

(8) The applicant is the owner of the facility for which a utility encroachment permit is granted and is solely responsible for maintenance of the facility. A new utility encroachment permit and the permit provisions must be renegotiated with the department before the facility may be re-assigned to another company.

(9) Any utility encroachment permit granted by the department is subject to revocation at any time.

(10) Facilities installed under a utility encroachment permit are not eligible under 60-4-401 through 60-4-403, MCA, for payment of relocation costs for department highway construction projects. The facility owner agrees to waive all future rights to be reimbursed for adjustment costs incurred should maintenance or construction of the non-interstate federal-aid system highway require adjustment of the facility.

AUTH: 60-2-201, 60-3-101, 60-4-601, MCA

IMP: 60-2-201, 60-5-101, 60-5-104, MCA

REASON: Proposed New Rule II is necessary to encourage middle mile installation of fiber optic or telecommunications facilities in non-interstate right-of-way, to ensure fiber is made available to end mile—rural underserved or unserved—areas, which is not always possible by use of interstate highway right-of-way. New Rule II will encourage deployment of fiber optic and telecommunication facilities in non-interstate federal-aid state highways.

New Rule II is also necessary to establish application processes and requirements for issuance of utility encroachment permits for broadband, fiber optic, and telecommunications facilities in non-interstate federal-aid state highway right-of-way. New Rule II is necessary to distinguish telecommunication facility placement in non-interstate highway right-of-way from that established in New Rule I for interstate right-of-way under SB 392.

New Rule II is also necessary to establish the utility encroachment permit holder's responsibility for any future relocation due to future highway projects, requirements for installation standards, ownership and responsibility for maintenance, and lack of eligibility for future MDT relocation payments due to highway construction projects.

4. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:

18.7.203 SCOPE AND APPLICATION (1) These regulations apply to all portions of federal-aid highway systems in Montana~~. They~~ and establish requirements for occupancy of highway rights-of-way by:

(a) and (b) remain the same.

(2) Except as noted in ~~subsection~~ (3) ~~of this rule~~, [striking these because of ARM formatting style] these regulations shall apply to:

(a) through (e) remain the same.

(f) ~~Occupancy by utility-type facilities that do not have a statutory right to occupy highway right-of-way, but are allowed under established use and~~ Occupancy by facilities which are not public utilities but may be allowed under encroachment permits granted and administered by the department.

(g) Longitudinal occupancy of non-interstate commission designated or state highway right-of-way by a non-public utility is ~~contrary to department policy. Where such longitudinal occupancy is approved by the district administrator, it will only be by a~~ subject to department review for maximum occupancy, remaining right-of-way availability, maintenance restrictions, safety, and all other considerations under these rules and shall only be approved, when feasible, via revocable encroachment permit.

(h) Longitudinal occupancy of interstate right-of-way is subject to ARM 18.7.204 and [NEW RULE I].

(3) remains the same.

(4) ~~Lands~~ Real property administered by the department in excess of highway right-of-way ~~are~~ is not subject to facility occupancy under these regulations. Easements or permits for use of such ~~lands are obtained through the department's right-of-way bureau, land section supervisor, Helena, Montana~~ real property must be requested through the department's right-of-way bureau.

AUTH: 60-2-201, 60-3-101,60-4-402, 60-4-601, MCA

IMP: 60-2-201, 60-3-101, 60-4-402, 60-4-601, 60-5-101, 60-5-104, MCA

REASON: The proposed amendments to ARM 18.7.203 are necessary to make the rule consistent with 60-4-601, MCA (SB 392), allowing longitudinal use of interstate right-of-way for eligible projects. The proposed amendments will clarify the method by which the department will review applications for non-public utility encroachment permits for longitudinal use of non-interstate federal-aid highways. The proposed amendments are also necessary to allow right-of-way use agreements for eligible project facilities and utility encroachment permits for crossings on interstate highways under 60-4-601, MCA (SB 392). The proposed amendments are also necessary to revise outdated language to be consistent with the rule definitions of public and non-public utilities.

18.7.204 OCCUPANCY OF FULL CONTROLLED-ACCESS FACILITY RIGHT-OF-WAY (1) Occupancy of full controlled-access facility right-of-way ~~is contrary to department policy, however, occupancy may~~ under right-of-way use agreements (interstate encroachment permit) may only be permitted in special cases where the ~~utility~~ facility owner shows that:

(a) for interstate eligible projects, all requirements of 60-4-601, MCA and [NEW RULE I] are met;

(a) and (b) remain the same but are renumbered (b) and (c).

~~(c)~~ (d) the accommodation will not interfere with or impair the present use or future expansion of the full controlled-access facility; and

(d) remains the same but is renumbered (e).

(2) remains the same.

(3) Utilities ~~can~~ may be installed within the right-of-way of a crossroad over or under the full controlled-access facility, provided such installation is in compliance with all applicable rules, and provided the installation and servicing ~~can~~ may be accomplished without access from the through traffic facilities of the full controlled-access facility roadway or ramps.

AUTH: 60-3-101, 60-4-402, MCA

IMP: 60-3-101, 60-4-402, 60-4-601, MCA

REASON: The proposed amendment to ARM 18.7.204 is necessary to make the rule consistent with 60-4-601, MCA (SB 392), allowing longitudinal use of interstate right-of-way for eligible projects. The proposed amendments will clarify the use of other access-control facilities under utility encroachment permits or occupancy agreements, as distinguished from interstate longitudinal occupancy by eligible projects under a right-of-way use agreement and 60-4-601, MCA (SB 392).

18.7.206 PRIVATE AND PUBLIC UTILITIES – RELOCATION COSTS

(1) and (2) remain the same.

(3) Eligible project pipeline or fiber optic or other communications-type cables and associated infrastructure facilities under 60-4-601, MCA occupying interstate right-of-way under a right-of-way use agreement are not public or private utilities.

(3) and (4) remain the same but are renumbered (4) and (5).

(6) Eligible project pipeline or fiber optic or other communications-type cables and associated infrastructure under 60-4-601, MCA occupying interstate right-of-way under a right-of-way use agreement are not eligible for highway construction project relocation payment under federal or state statutes, regulations, or rules.

AUTH: 60-2-201, 60-3-101,60-4-402, 60-4-601, MCA

IMP: 60-2-201, 60-3-101, 60-4-402, 60-4-403, 60-4-601, 60-5-101, 60-5-104, MCA

REASON: The proposed amendment to ARM 18.7.206 is necessary to make the rule consistent with 60-4-601, MCA (SB 392), allowing longitudinal use of interstate right-of-way for eligible project facilities. The proposed amendments will distinguish interstate longitudinal occupancy by eligible project facilities under a right-of-way use agreement and 60-4-601, MCA (SB 392) as a different type of facility than public or private utility. The proposed amendment will also clarify that these facilities are not eligible for highway construction project relocation payments, and they are not public utilities.

5. The following rules are proposed to be repealed:

18.7.205 SUPERSEDED REGULATIONS AND PERMITS

AUTH: 60-3-101, 60-4-402, MCA

IMP: 60-3-101, 60-4-402, MCA

REASON: The repeal of ARM 18.7.205 is necessary because the superseded regulations and permits cited in the rule no longer exist, and the rule is therefore archaic.

18.7.221 STANDARDS AND PROCEDURES

AUTH: 60-3-101, 60-4-402, MCA

IMP: 60-3-101, 60-4-402, MCA

REASON: The repeal of ARM 18.7.221 is necessary because the rule is archaic and refers to procedures which were superseded in 1972.

6. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to Steve Giard, Utility Section Manager, Department of Transportation, P.O. Box 201001, Helena, Montana, 59620-1001; fax (406) 444-7254 or e-mail sgiard@mt.gov, and must be received no later than 5:00 p.m., June 24, 2022.

7. A Department of Transportation designee will preside over and conduct this hearing.

8. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in paragraph 6 above or may be made by completing a request form at any rules hearing held by the department.

9. An electronic copy of this proposal notice is available on the Department of Transportation website at www.mdt.mt.gov.

10. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor of SB 392 was contacted by email and U.S. Mail on October 22, 2021.

11. With regard to the requirements of 2-4-111, MCA, the department has determined that the adoption, amendment, and repeal of the above-referenced rules will significantly and directly impact small businesses.

12. With regard to the requirements of 2-15-142, MCA, the department has determined that the adoption, amendment, and repeal of the above-referenced rules will not have direct tribal implications.

/s/ Carol Grell Morris /s/ Malcolm "Mack" Long

Carol Grell Morris Malcolm "Mack" Long

Rule Reviewer Director

Department of Transportation

Certified to the Secretary of State May 17, 2022.