The agency set off a firestorm of protest last week when it removed a flag mural that had been painted on a concrete slab near the freeway section after the terrorist attacks on Sept. 11, 2001.
Caltrans said it removed the mural, which was visible to passing motorists, after it belatedly discovered it was on state-owned land.
Gov. Schwarzenegger said on Friday that it was "unconscionable" to remove the flag mural only a few days before the Fourth of July.
Caltrans spokesman Matt Rocco said today that the agency will meet sometime this week with East Bay residents R.J. Waldron, Eric Noda and Thomas Hanley, who painted the mural in 2001, "to discuss a suitable location" for a flag mural.
"We will work with the artists and the community in the permitting process" for a permanent mural, Rocco said.
He said two other men repainted the flag mural on Saturday, without contacting Caltrans, so it would be in place for the Fourth of July.
Rocco said Caltrans hasn't yet been in touch with the new artists but will also try to work with them if they want to have a permanent site for their work.
Steve Gallagher, a spokesman for the state Business, Transportation and Housing Agency, which oversees Caltrans, said, "The flag is back and will remain up until we figure out a permanent solution."