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U.S. Department of Transportation
Federal Highway Administration

Subject: INFORMATION: Guidance on New Iowa Regulations Relating to Bonus Act Control Areas

Susan Lauffer
Director, Office of Real Estate Services

Mr. Philip Barnes, Division Administrator (HAD-IA)

Date: November 30, 2004

Reply to: HEPR
Attn. of: Realty Officer

The purpose of this memorandum is to provide guidance for the interpretation and enforcement of Bonus Act provisions relating to the control of outdoor advertising on the Interstate System. Because it is necessary for the Iowa Division to advise the Iowa Department of Transportation (Iowa DOT) of the FHWA position on this issue, we are providing a summary of our views, which we have discussed in several meetings with your staff and you.

In 2002, the State of Iowa adopted Chapter 1070 of the Iowa Acts [now Subsection 306B.2(4) of the Iowa Code]. Our interpretation is that the Iowa statute eliminates from Iowa law the Bonus Act's September 21, 1959, control standard for outdoor advertising. In place of the original Federal language, Iowa adopted a provision that permits advertising devices located "in areas zoned and used for commercial or industrial purposes under authority of law, regulation, or ordinance of [Iowa] or a political subdivision of [Iowa]." We understand that the law's implementing regulations became effective in August 2004, and that Iowa has indicated that it intends to apply the new law and implementing regulations.

Iowa attempted in its new law to remedy a long-standing issue in the outdoor advertising control program: the September 21, 1959, zoning control date in the Bonus Act. As a part of the legislative process, Iowa combined the elimination of the 1959 zoning control date with restrictions designed to control the erection of signs in areas zoned, but not used, commercially. The resulting law places the focus of inquiry on the actual zoning and the actual use of the property. While the additional protection against so-called "sham zoning" is a commendable outcome, there now is a clear conflict between the Iowa law and the provisions of both the Bonus Act and the Iowa Federal-State Agreement dated May 31, 1965. This situation is of substantial concern, as it may have implications for the implementation and enforcement of the Bonus Act in 22 other States.

It is important to emphasize that the guidance outlined in this memorandum is entirely consistent with the views expressed in the February 2, 2001, reply letter from Vince Schimmoller's, FHWA Deputy Executive Director to Iowa DOT. The letter discussed Iowa's then-pending proposal to allow outdoor advertising signs in areas not permitted under the Bonus Act Federal-State Agreement executed in 1965. At the time that letter was written, FHWA deferred a final determination on what action would be taken by FHWA in response to the pending Iowa

legislation. The reason for the deferment was the possibility that a proposed Federal rulemaking process might resolve the conflict by amending the Bonus Act regulations. Vince Schimmoller's letter also advised Iowa DOT that repayment of amounts received under the Bonus Act was a possible requirement in the event that no change was made in applicable Federal statutes or regulations. Subsequent to Vince Schimmoller's letter, the Federal rulemaking was postponed. No rulemaking or statutory revision is scheduled in the near future. Iowa's Federal-State Bonus Agreement executed on May 31, 1965, and reaffirmed in the April 20, 1972, Federal-State Agreement, remains in effect.

We continue to endorse the solution contained in Vince Schimmoller's letter. Under Section VII of the Federal-State Agreement, Iowa must repay the amounts it received under the Bonus Act for areas where it abandons enforcement of the Bonus Act requirements. Alternatively, Iowa may repay all of its Bonus Act payments, totaling $3,395,000, to release itself completely from the Bonus Program. In either case, of course, the provisions of the Highway Beautification Act of 1965 will continue to apply.

If Iowa wishes to implement its law and make a repayment, the Office of Real Estate Services will assist you in working out the appropriate procedures based on the Federal-State Agreement. The accompanying FHWA guidance memorandum on this topic, dated November 30, 2004, outlines approaches to calculating repayment, as well as some caveats for consideration by States wishing to make repayments. Our view is that the repayment calculation, like the original payments to the State, should be keyed to the project segments of the Interstate System. This is consistent with the language of the Federal-State Agreement, which ties Bonus Act payments for an Interstate project to the control of the entire "adjacent area" on the project. The calculation should include the mileage for those areas where outdoor advertising (1) is prohibited under the Bonus Act and the May 31, 1965, Federal-State Bonus Agreement, and (2) is purportedly freed from the Bonus Act's September 21, 1959, restriction by Iowa's new law; and (3) where Iowa has allowed a sign to be erected or maintained. The erection of the first sign in a segment triggers the requirement to repay that entire segment. I understand from our discussions that the Iowa Division and Iowa DOT have the records needed to identify the segments paid for, or claimed but not yet paid, under the Bonus Act.

We appreciate that the State has been working on this matter for some time, and that it had hoped that changes in the Federal law would resolve the question. Because that did not occur, FHWA is left with little choice, but to apply the existing Federal law and the Federal-State Agreement.

In preparing this memorandum, the Office of Real Estate Services has consulted with you and your staff, and with other Divisions with expertise in this area. We have cleared this memorandum with legal counsel. The Office of Chief Counsel concurs that this guidance complies with the provisions of the Bonus Act and the Federal-State Agreement executed by the State of Iowa and FHWA.

Updated: 9/5/2014
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