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Texas Highway Right of Way Lease (3-TX-i)

Information current as of 2020
In Texas, any person not a public utility (developer) may need a State Highway Right-of-Way Lease from the Texas Department of Transportation (TxDOT) and Texas General Land Office (GLO) to place utility lines along any highway asset that is not needed for the term of the lease. A highway asset is defined as “an interest in real property that is held or controlled by the department for a highway or department purpose.” 43 Tex. Admin. Code. § 21.600-01. TxDOT may lease any highway asset, but the GLO conducts the leasing process.

The TxDOT and the GLO regulate highway right-of-way leasing pursuant to 43 Tex. Admin. Code §§ 21.1-21.972.

Highway Right of Way Lease Process

3-TX-i.1 - Is the Asset Currently Needed for Highway Purposes?

The TxDOT may lease any highway asset not currently needed for highway purposes. 43 Tex. Admin. Code. § 21.600.

3-TX-i.2 - Does the Developer Control the Minerals Adjacent to the Road?

Mineral owners adjacent to the right of way have a preferential right to lease the right of way for oil and gas. If the developer does not control the minerals or leasehold adjacent to the road, then they must obtain a Waiver of Preferential Right to Lease Highway Right of Way from the mineral owner. Guidelines for Leasing State Highway Right of Way Tracts.

3-TX-i.3 - Notify Adjacent Mineral Owner of Proposed Lease or Obtain Waiver

Each adjacent mineral owner must get notice of the proposed lease of the highway right of way. The mineral owner may choose to waive the right to receive notice of proposed leases. If the land adjoining a right of way tract is subject to an existing oil and gas lease, then an “adjacent mineral owner” refers to all working interest (leasehold) owners of the lease on the adjoining land. Guidelines for Leasing State Highway Right of Way Tracts.

3-TX-i.4 to 3-TX-i.5 - Request for State Highway Right of Way Lease

A developer who wishes to obtain a highway asset lease must submit a written request to the TxDOT district engineer of the district in which the asset is located. 43 Tex. Admin. Code. § 21.606(a).

The district engineer will forward the request for lease to the right of way division for processing and, when appropriate, for preparing recommendations to the commission, the director, and the Federal Highway Administration. 43 Tex. Admin. Code. § 21.606(c).

3-TX-i.6 - Publish Notice of Proposed Lease

Notice of the proposed lease must be advertised at least 20 days prior to the bid opening. The notice will be published once a week for three consecutive weeks prior to bid opening. 43 Tex. Admin. Code. § 21.603(b).

3-TX-i.7 - Opening Bid/Application to Lease Highway Right of Way

Leases are awarded on a sealed bid basis with TxDOT having the right to reject all bids. 43 Tex. Admin. Code. § 21.603(a).

3-TX-i.8 - Does GLO Approve?

The School Land Board, a board within the GLO, must approve the lease before it is issued. The Board is also entitled to a bonus payment and the statutory sales fee equal to 1-1/2 percent of the bonus payment. Guidelines for Leasing State Highway Right of Way Tracts.

3-TX-i.9 - State Highway Right of Way Lease

The GLO will issue the State Highway Right of Way lease following School Land Board approval. A lease for highway assets must be in written form approved by the director of GLO and must include the following:

  • Contact information of the party responsible for developing and operating the leased asset;
  • Amount of rent, deposits, term of the lease, and the method of payment of the rental amounts;
  • A statement of the authorized use of the leased asset;
  • A statement that the director must provide written approval of any change in the authorized use of the leased asset;
  • Detailed description of the leased asset;
  • The general design for the use of the leased asset, including any improvements to be constructed, any maps, plans, or sketches necessary to set out the pertinent features in relation to any highway facility and a description of any temporary improvements provided by the developer;
  • A statement that any significant change in the design of improvements by the developer is subject to prior written approval by the district engineer;
  • A statement that TxDOT must have the right to approve all construction and construction plans on the leased asset;
  • Permission for the representatives of TxDOT to enter the area for inspection, maintenance, or reconstruction of highway facilities as necessary, or to determine compliance with lease terms;
  • A statement that any improvements will be maintained by the developer at their expense to assure that any structures in the leased area will be kept in good condition, and that maintenance will not interfere with highway use;
  • A statement that in the event the TxDOT district engineer (“district engineer”) determines that the responsible party has failed in its maintenance obligations, TxDOT has the right to enter the leased asset to perform such work, all at the expense and liability of the developer;
  • A statement requiring forfeiture of deposits, payment to the department of litigation costs, or any other expense incurred by the department of litigation costs, or any other expense incurred by TxDOT due to nonperformance of the terms of the lease agreement;
  • A performance bond when considered necessary by TxDOT;
  • Adequate public liability insurance for the leased asset, the conduct of developer’s business, and developer’s indemnification obligations to TxDOT set forth in the lease, to be provided by developer at their expense, naming TxDOT as an additional insured and including other endorsements as determined to be necessary by TxDOT, in an amount and form acceptable to TxDOT for the payment of damages occurring to the highway facility or to the public for personal injury, loss of life or property damage which may occur; except that the director may waive this requirement when the lease is with a county, city, state agency, or the federal government and when the entity has assumed the specific responsibility for payment of any related damage to the highway asset or to the public for personal injury, loss of life, or property damage;
  • A statement that the district engineer may terminate the lease if it finds that the asset is not being used in accordance with the terms of the lease or is abandoned;
  • A statement that the lease may be terminated by the district engineer when there is noncompliance with the terms of the lease or the conditions are violated and noncompliance or violation is not corrected within a reasonable time after written notice of noncompliance has been given and that in the event the lease is terminated and the district engineer determines it necessary to request the removal of developer improvements located within the asset, the removal shall be accomplished by the developer in a manner prescribed by the district engineer at no cost to TxDOT;
  • A statement that the lease and leased premises must not be transferred, assigned, or conveyed to another party without written approval by the district engineer;
  • A requirement that the lease or any improvement will be kept free of all liens and will not be used as security for a loan. Developer will be allowed to mortgage or otherwise pledge or grant a security interest in the leasehold interest to secure financing for the acquisition of the leasehold and for the construction of an improvement permitted under the lease, subject to the terms and conditions in the lease;
  • A statement that the developer assumes all risks of losses resulting from the lease;
  • A description of nondiscrimination requirements; and
  • Any other provisions deemed necessary or desirable by the right of way division director at the GLO.

43 Tex. Admin. Code. § 21.604.

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