01-11810. Federal-Aid Project Agreement

AGENCY:

Federal Highway Administration (FHWA), DOT.

ACTION:

Final rule.

SUMMARY:

The FHWA is amending its regulation on project agreements. Section 1305 of the Transportation Equity Act for the 21st Century (TEA-21) amended 23 U.S.C. 106(a) and combined authorization of work and execution of the project agreement for a Federal-aid project into a single action. Changes to the agreement provisions reflect these adjustments. Additionally, section 1304 of the TEA-21 amended 23 U.S.C. 102(b) to include a provision to allow the granting of time extensions for engineering cost reimbursement. Changes to the agreement procedures are added to provide this new flexibility.

DATES:

This final rule is effective June 11, 2001.

FOR FURTHER INFORMATION CONTACT:

Mr. Jack Wasley, Office of Program Administration (HIPA), 202-366-4658, or Harold Aikens, Office of the Chief Counsel, 202-366-0791, Federal Highway Administration, 400 Seventh Street, SW., Washington, DC 20590-0001. Office hours are from 7:45 a.m. to 4:15 p.m., e.t., Monday through Friday except Federal holidays.

SUPPLEMENTARY INFORMATION:

The amendments in this final rule are based primarily on the notice of proposed rulemaking (NPRM) published on August 31, 2000, at 65 FR 52962 (FHWA Docket No. 2000-7426). All comments received in response to this NPRM have been considered in adopting these amendments.

Electronic Access

Internet users may access all comments received by the U.S. DOT Dockets, Room PL-401 by using the universal resource locator (URL): http://dms.dot.gov. It is available 24 hours each day, 365 days each year. Electronic submission and retrieval help and guidelines are available under the help section of the web site.

An electronic copy of this document may be downloaded by using a computer, modem and suitable communications software from the Government Printing Office's Electronic Bulletin Board Service at [phone]. Internet users may reach the Office of the Federal Register's home page at: http://www.nara.gov/​fedreg and the Government Printing Office's database at: http://www.access.gpo.gov.

Background

Under the provisions of 23 U.S.C. 106, a formal agreement between the State transportation department (STD) and the FHWA is required for Federal-aid highway projects. This agreement, referred to as the “project agreement,” is in essence a written contract between the State and the Federal Government defining the extent of the work to be undertaken, the State and the Federal shares of a project's cost, and commitments concerning maintenance of the project.

The present regulation at 23 CFR 630, subpart C, provides requirements concerning the project agreement. It includes detailed instructions on preparation of the project agreement, and an assemblage of agreement provisions that are part of the project agreement.

The present regulation at 23 CFR 630, subpart A, provides requirements concerning the project authorization. The FHWA project authorization commits the Federal Government to participate in the funding of a project, except in those instances where the State requests FHWA authorization without the commitment of Federal funds. In addition, FHWA authorization also establishes a point in time after which costs incurred on a project are eligible for Federal participation.

Requirements covering project agreements are contained in this final rule. This final rule updates and modifies the existing regulation to incorporate needed changes made by sections 1304 and 1305 of the TEA-21, Public Law 105-178, 112 Stat.107, it combines the project agreement and the project authorization of work. The final rule amends these regulations in the manner and for the reasons indicated below.

Discussion of Comments

The FHWA published a notice of proposed rulemaking (NPRM) concerning proposed revisions to Part 630 on August 31, 2000, at 65 FR 52962. Interested persons were invited to participate in the development of this final rule by submitting written comments to the FHWA. Only one State transportation agency submitted comments. The State agency provided two comments on proposed § 630.106(f), and four comments concerning clarification of the NPRM's section-by-section analysis of § 630.106(f).

Section 630.106(f)(2) discusses the manner for establishing the Federal share of eligible project costs. The comment was: Could an agreement with a lump sum Federal share be changed to a pro rata Federal share? Yes, when the Federal share in the project agreement is changed, the manner in which the Federal share is established can also be changed. The Federal share established as either lump sum or pro rata in the project agreement at the time of authorization does not have to be the same, but the Federal share can only be adjusted to reflect the actual bid amount received. The final rule is not changed as a result of this comment.

Concerning the section-by-section analysis for § 630.106(f), the commenter requested explanation of the following: (1) whether the Federal share agreed to would continue through the life of the project; and (2) whether manipulation of the funding levels of individual projects to accommodate program funding changes or needs would not be allowed. The FHWA believes that once a project is under agreement the amount of Federal funds and appropriation type cannot be changed except to reflect a change in the bids received or any one of the four general categories for exceptions contained in § 630.106(c)(1) through (c)(4).

A follow up comment stated that the agency would not support any regulation that would require additional funds to cover project cost overruns. Establishing the contractual obligation of the Federal Government for the payment of the Federal share of the cost of the project is a legislative requirement of 23 U.S.C. 106(a)(3). The Federal Government cannot commit future funds that might not be available. Funds must be available at the time the project agreement is executed. The State is still required to prepare a modification to a project agreement as changes occur. In the same paragraph, it was suggested that the term “significantly” be removed from the analysis section to avoid any vagueness. The term “significant” rather than “substantive” is used in the discussion to account for different interpretations of what is substantial. The word “significantly” might suggest considerable in amount, which might not recognize that flexibility may be applied for project implementation. The rule does not attempt to apply hard and fast rules or percentages as project needs and circumstances vary. Current § 630.106(f)(2), that allows a change in the project agreement to reflect the actual bid received, uses the term “substantive” when compared to the STD's estimated cost to trigger an adjustment to the Federal share. The cost difference should have real meaning when compared to the total cost before an adjustment is made to the Federal share. For example, a thousand dollar cost difference, when compared to a million dollar estimate doesn't have much meaning. Therefore, substantial may be viewed differently among local, regional, and State projects.

The State agency asked if the manner established for the Federal-aid share of eligible project costs under proposed § 630.106(f)(1) could be changed at the time an adjustment is made to reflect the actual bids received. The long standing regulatory provision, retained in § 630.106(f)(2), that allows a one time change in the project agreement to reflect the actual bid received, also permits the manner established for the Federal-aid share to be changed. Adjustments to the Federal share, or the manner in which established under § 630.106(f)(1) will only be permitted for projects in situations where bid prices are significantly different from the estimates at the time of FHWA authorization. A change in the Federal commitment from the agreed to amount of Federal funds obligated from a specific Federal appropriation type or category of funds, to take advantage of new appropriations or to switch appropriations of individual projects to accommodate program funding changes or needs, is not allowed except for authorization to proceed under § 630.106(c). The four general categories for exceptions to this rule contained in § 630.106(c)(1) through (4) allow a change to any category of funds eligible at the time funds are available for conversion to a contractual obligation of the Federal government under 23 U.S.C. 106.

The State agency proposed changing the wording in § 630.106(f)(2) from “shortly after” to “based on.” The State agency felt that the term “shortly” was too vague. It is our intent to make any funding changes, made as a result of actual bids, as soon as it is practical after the bids are received within the same Federal fiscal year. Our intent is not to have Federal commitments outstanding. Funding changes in the amount of Federal funds committed as a result of actual bids received should be as soon as practicable within the same Federal fiscal year that the bids are received. For these reasons, we are not changing the wording in § 630.106(f)(2).

Executive Order 12866 (Regulatory Planning and Review) and DOT Regulatory Policies and Procedures

The FHWA has determined that this action is not a significant regulatory action within the meaning of Executive Order 12866 or significant within the meaning of U. S. Department of Transportation regulatory policies and procedures. The final rule updates the Federal-aid project agreement regulation to conform to recent laws, regulations, or guidance and clarifies existing policies. The economic impact of this rulemaking will be minimal; therefore, a full regulatory evaluation is not required.

Regulatory Flexibility Act

In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-612), the FHWA has evaluated the effects of this rule on small entities. Based on the evaluation, the FHWA certifies that this action will not have a significant economic impact on a substantial number of small entities. This rule clarifies and simplifies procedures used by State highway agencies in accordance with existing laws, regulations, or guidance.

Unfunded Mandates Reform Act of 1995

This rule would not impose a Federal mandate resulting in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (2 U.S.C. 1531 et seq.).

Executive Order 12988 (Civil Justice Reform)

This action meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

Executive Order 13045 (Protection of Children)

We have analyzed this action under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not economically significant and does not concern an environmental risk to health or safety that may disproportionately affect children.

Executive Order 12630 (Taking of Private Property)

This rule would not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

Executive Order 13132 (Federalism)

This action has been analyzed in accordance with the principles and criteria contained in Executive Order 13132, dated August 4, 1999, and it has been determined that it does not have a substantial direct affect or significant federalism implications on States or local governments that would limit the policymaking discretion of the States. Nothing in this document directly preempts any State law or regulation.

Executive Order 13175 (Tribal Consultation)

The FHWA has analyzed this proposal under Executive Order 13175, dated November 6, 2000, and believes that the final rule will not have substantial direct effects on one or more Indian tribes; will not impose substantial direct compliance costs on Indian tribal governments; and will not preempt tribal law. A formal project agreement between the FHWA and a State is required for all Federal-aid projects. The project agreement process under this final rule has not changed for Indian tribal governments. Federal-aid funds for projects involving Indian tribal governments will continue indirectly through the State. Authorization, project agreement, and obligation of funds are by statute a combined action. To avoid confusion and misinterpretations, the final regulation (23 CFR 630) is being revised to reflect current procedures. Therefore, a tribal summary impact statement is not required.

Executive Order 12372 (Intergovernmental Review)

Catalog of Federal Domestic Assistance Program Number 20.205, Highway Planning and Construction. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.

Paperwork Reduction Act of 1995

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et seq.), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct, sponsor, or require through regulations. The FHWA has reviewed this rule and determined that the information collection requirements associated with this rulemaking are covered by a currently approved information collection, OMB Approval No. 2125-0529, entitled, “Preparation and Execution of the Project Agreement and Modifications,” which is due to expire on May 31, 2001. There are no changes to the current information collection burden estimates as a result of this final rule. Interested persons were invited to provide comments regarding this information collection as a part of the development of this final rule by submitting written comments on the NPRM. No comments were received regarding these information collection requirements. This final rule updates and modifies the existing requirements to reflect statutory changes to the project agreement process enacted by section 1305 of the Transportation Equity Act for the 21st Century (TEA-21, Pub. L. 105-178) amended 23 U.S.C. 106(a) and combined authorization of work and execution of the project agreement for a Federal-aid project into a single action.

National Environmental Policy Act

The agency has analyzed this action for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and has determined that this action would not have any effect on the quality of the environment.

Regulation Identification Number

A regulation identification number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN contained in the heading of this document can be used to cross reference this action with the Unified Agenda.

List of Subjects in 23 CFR Part 630

• Government contracts
• Grant programs—Transportation
• Highways and roads
• Project agreement procedures

Issued on: May 3, 2001.

Vincent F. Schimmoller,

Deputy Executive Director, Federal Highway Administration.

In consideration of the foregoing, the FHWA amends title 23, chapter I, Code of Federal Regulations, by amending part 630, as set forth below.

PART 630—PRECONSTRUCTION PROCEDURES

1. Revise the authority citation for part 630 to read as follows:

Authority: 23 U.S.C. 106, 109, 115, 315, 320, and 402(a); 23 CFR 1.32; and 49 CFR 1.48(b).

2. Revise subpart A of part 630 to read as follows:

Subpart A—Project Authorization and Agreements

630.102 630.104 630.106 630.108 630.110 630.112

§ 630.102

Purpose.

The purpose of this subpart is to prescribe policies for authorizing Federal-aid projects through execution of the project agreement required by 23 U.S.C. 106(a)(2).

§ 630.104

Applicability.

(a) This subpart is applicable to all Federal-aid projects unless specifically exempted.

(b) Other projects which involve special procedures are to be approved, or authorized as set out in the implementing instructions or regulations for those projects.

§ 630.106

Authorization to proceed.

(a)(1) The State transportation department (STD) must obtain an authorization to proceed from the FHWA before beginning work on any Federal-aid project. The STD may request an authorization to proceed in writing or by electronic mail for a project or a group of projects.

(2) The FHWA will issue the authorization to proceed either through or after the execution of a formal project agreement with the State. The agreement can be executed only after applicable prerequisite requirements of Federal laws and implementing regulations and directives are satisfied. Except as provided in paragraphs (c)(1) through (c)(4) of this section, the FHWA will obligate Federal funds in the project or group of projects upon execution of the project agreement.

(b) Federal funds shall not participate in costs incurred prior to the date of a project agreement except as provided by 23 CFR 1.9(b).

(c) The execution of the project agreement shall be deemed a contractual obligation of the Federal government under 23 U.S.C. 106 and shall require that appropriate funds be available at the time of authorization for the agreed Federal share, either pro rata or lump sum, of the cost of eligible work to be incurred by the State except as follows:

(1) Advance construction projects authorized under 23 U.S.C. 115.

(2) Projects for preliminary studies for the portion of the preliminary engineering and right-of-way (ROW) phase(s) through the selection of a location.

(3) Projects for ROW acquisition in hardship and protective buying situations through the selection of a particular location. This includes ROW acquisition within a potential highway corridor under consideration where necessary to preserve the corridor for future highway purposes. Authorization of work under this paragraph shall be in accord with the provisions of 23 CFR part 710.

(4) In special cases where the Federal Highway Administrator determines it to be in the best interest of the Federal-aid highway program.

(d) For projects authorized to proceed under paragraphs (c)(1) through (c)(4) of this section, the executed project agreement shall contain the following statement: “Authorization to proceed is not a commitment or obligation to provide Federal funds for that portion of the undertaking not fully funded herein.”

(e) For projects authorized under paragraphs (c)(2) and (c)(3) of this section, subsequent authorizations beyond the location stage shall not be given until appropriate available funds have been obligated to cover eligible costs of the work covered by the previous authorization.

(f)(1) The Federal-aid share of eligible project costs shall be established at the time the project agreement is executed in one of the following manners:

(i) Pro rata, with the agreement stating the Federal share as a specified percentage; or

(ii) Lump sum, with the agreement stating that Federal funds are limited to a specified dollar amount not to exceed the legal pro rata.

(2) The pro-rata or lump sum share may be adjusted before or shortly after contract award to reflect any substantive change in the bids received as compared to the STD's estimated cost of the project at the time of FHWA authorization, provided that Federal funds are available.

(3) Federal participation is limited to the agreed Federal share of eligible costs actually incurred by the State, not to exceed the maximum permitted by enabling legislation.

(g) The State may contribute more than the normal non-Federal share of title 23, U.S.C. projects. In general, financing proposals that result in only minimal amounts of Federal funds in projects should be avoided unless they are based on sound project management decisions.

(h)(1) Donations of cash, land, material or services may be credited to the State's non-Federal share of the participating project work in accordance with title 23, U.S.C., and implementing regulations.

(2) Contributions may not exceed the total costs incurred by the State on the project. Cash contributions from all sources plus the Federal funds may not exceed the total cost of the project.

§ 630.108

Preparation of agreement.

(a) The STD shall prepare a project agreement for each Federal-aid project.

(b) The STD may develop the project agreement in a format acceptable to both the STD and the FHWA provided the following are included:

(1) A description of each project location including State and project termini;

(2) The Federal-aid project number;

(3) The work covered by the agreement;

(4) The total project cost and amount of Federal funds under agreement;

(5) The Federal-aid share of eligible project costs expressed as either a pro rata percentage or a lump sum as set forth in § 630.106(f)(1);

(6) A statement that the State accepts and will comply with the agreement provisions set forth in § 630.112;

(7) A statement that the State stipulates that its signature on the project agreement constitutes the making of the certifications set for in § 630.112; and

(8) Signatures of officials from both the State and the FHWA, and the date executed.

(c) The project agreement should also document, by comment, instances where:

(1) The State is applying amounts of credits from special accounts (such as the 23 U.S.C. 120(j) toll credits, 23 U.S.C. 144(n) off-system bridge credits and 23 U.S.C. 323 land value credits) to cover all or a portion of the normal percent non-Federal share of the project;

(2) The project involves other arrangements affecting Federal funding or non-Federal matching provisions, including tapered match, donations, or use of other Federal agency funds, if known at the time the project agreement is executed; and

(3) The State is claiming finance related costs for bond and other debt instrument financing (such as payments to States under 23 U.S.C. 122).

(d) The STD may use an electronic version of the agreement as provided by the FHWA.

(Approved by the Office of Management and Budget under control number 2125-0529)

§ 630.110

Modification of original agreement.

(a) When changes are needed to the original project agreement, a modification of agreement shall be prepared. Agreements should not be modified to replace one Federal fund category with another unless specifically authorized by statute.

(b) The STD may develop the modification of project agreement in a format acceptable to both the STD and the FHWA provided the following are included:

(1) The Federal-aid project number and State;

(2) A sequential number identifying the modification;

(3) A reference to the date of the original project agreement to be modified;

(4) The original total project cost and the original amount of Federal funds under agreement;

(5) The revised total project cost and the revised amount of Federal funds under agreement;

(6) The reason for the modifications; and,

(7) Signatures of officials from both the State and the FHWA and date executed.

(c) The STD may use an electronic version of the modification of project agreement as provided by the FHWA.

§ 630.112

Agreement provisions.

(a) The State, through its transportation department, accepts and agrees to comply with the applicable terms and conditions set forth in title 23, U.S.C., the regulations issued pursuant thereto, the policies and procedures promulgated by the FHWA relative to the designated project covered by the agreement, and all other applicable Federal laws and regulations.

(b) Federal funds obligated for the project must not exceed the amount agreed to on the project agreement, the balance of the estimated total cost being an obligation of the State. Such obligation of Federal funds extends only to project costs incurred by the State after the execution of a formal project agreement with the FHWA.

(c) The State must stipulate that as a condition to payment of the Federal funds obligated, it accepts and will comply with the following applicable provisions:

(1) Project for acquisition of rights-of-way. In the event that actual construction of a road on this right-of-way is not undertaken by the close of the twentieth fiscal year following the fiscal year in which the project is authorized, the STD will repay to the FHWA the sum or sums of Federal funds paid to the transportation department under the terms of the agreement. The State may request a time extension beyond the 20-year limit with no repayment of Federal funds, and the FHWA may approve this request if it is considered reasonable.

(2) Preliminary engineering project. In the event that right-of-way acquisition for, or actual construction of, the road for which this preliminary engineering is undertaken is not started by the close of the tenth fiscal year following the fiscal year in which the project is authorized, the STD will repay to the FHWA the sum or sums of Federal funds paid to the transportation department under the terms of the agreement. The State may request a time extension for any preliminary engineering project beyond the 10-year limit with no repayment of Federal funds, and the FHWA may approve this request if it is considered reasonable.

(3) Drug-free workplace certification. By signing the project agreement, the STD agrees to provide a drug-free workplace as required by 49 CFR part 29, subpart F. In signing the project agreement, the State is providing the certification required in appendix C to 49 CFR part 29, unless the State provides an annual certification.

(4) Suspension and debarment certification. By signing the project agreement, the STD agrees to fulfill the responsibility imposed by 49 CFR 29.510 regarding debarment, suspension, and other responsibility matters. In signing the project agreement, the State is providing the certification for its principals required in appendix A to 49 CFR part 29.

(5) Lobbying certification. By signing the project agreement, the STD agrees to abide by the lobbying restrictions set forth in 49 CFR part 20. In signing the project agreement, the State is providing the certification required in appendix A to 49 CFR part 20.

Subpart C—[Removed and Reserved]

3. In part 630, remove and reserve subpart C.